Saudi stocks gain 98 billion riyals, supported by Aramco and rising oil prices
The Saudi Stock Exchange's main index (TASI) closed trading yesterday (Monday) in positive territory, rising 0.13% to add approximately 13.36 points and settle at 10,489 points. The session witnessed a clear divergence in company performance, with 189 companies' shares declining, while only 74 companies saw their share prices rise. Four companies maintained their previous share prices, amidst active trading with a total value of approximately 7.2 billion riyals.
Aramco leads market gains
Despite the varying performance of individual companies, the total market capitalization of listed companies saw a significant jump, rising to SAR 9.24 trillion and achieving substantial daily gains of SAR 98.11 billion. This surge was largely attributed to the strong performance of Saudi Aramco, the global oil giant, which alone accounted for approximately 67.63% of the total market capitalization. The company's shares rose by 1.63%, adding SAR 101.64 billion to the market in a single trading session.
Index weighting mechanism and the impact of major companies
This performance highlights the structural discrepancy between absolute market capitalization and the impact of individual companies on the general index. Although Aramco holds the largest market share, its direct influence on the Tadawul All Share Index (TASI) is capped at 15%, according to the free float methodology used in the Saudi stock market. This mechanism aims to limit the dominance of large companies over the index's movement, explaining how the index can rise due to a single leading stock despite the decline of the vast majority of listed stocks.
The impact of geopolitical tensions on oil prices
These movements in the Saudi financial market coincide with a turbulent regional and international landscape, as oil prices witnessed a significant rise during today's trading. Analysts attribute this increase to escalating military tensions in the region and ongoing conflicts in neighboring countries, which have raised concerns among global investors regarding the security of energy supplies.
The Saudi stock market, being the largest in the Middle East, is highly sensitive to fluctuations in oil prices, as increases in crude oil prices often have a positive impact on the energy and petrochemical sectors. Concerns about the stability of supply chains in vital energy corridors have driven investors toward assets that benefit from higher energy prices, enhancing the appeal of Aramco shares and related sectors, which have acted as a buffer for the index amidst the sharp volatility experienced by other sectors.
