TASI may hit 10,000 points by early next year: Jadwa

Saudi Arabia’s Tadawul All Share Index (TASI) could rise another 20 percent between now and early next year to reach 10,000 points, compared to the current 8,400-level, Jadwa Investment said in an update on the Saudi stock market (Tadawul) on Thursday.

TASI’s year-to-date gains stand at around 17 percent, making it the best performing equity market when compared to major international and regional indices, Jadwa said.

Investor interest in the Saudi Arabia equities has been rising following Tadawul’s recent upgrade to emerging market status by major index compliers FTSE and MSCI.

“What is more impressive is that this performance has come at a time when emerging market equities have seen some pullback, with global fund investors decreasing their emerging market bond and equity allocations in recent months,” the investment advisory firm said.

Index provider FTSE Russell upgraded Saudi Arabia’s status to emerging market in March, and the MSCI inclusion followed in June.

“We expect active investors benchmarked to MSCI EM to start entering the market prior to actual inclusion, which is expected to drive TASI performance even higher, similar to patterns observed with other regional equity markets prior to MSCI EM inclusion,” Jadwa said.

Net purchases of SWAPs and buying by qualified foreign investors (QFIs) totaled SAR 4.4 billion in Q2 2018, taking total net QFI inflows to SAR 12.3 billion since the start of the year, it added.

Jadwa expects the combination of both FTSE EM and MSCI EM inclusion to bring in a minimum of $15 billion in passive inflows by the end of 2019.

An increase in oil prices has provided additional boost to investor sentiment towards Tadawul, the report noted, adding that TASI has seen a 7 percent rise in Q2 2018.

Brent crude crossed $80 per barrel earlier this year, and is currently trading around $74-level.

The benchmark grade had slumped to $30/bbl in early 2016.