Saudi market dips as investors take profits; Qatar rises slightly.

Post by : Monika

The financial markets in the Gulf region showed mixed performance on Sunday, September 28, 2025, as Saudi Arabia's stock market experienced losses while Qatar’s market edged slightly higher. Investors were closely watching developments in foreign ownership regulations, oil prices, and regional economic factors that influence the stock markets.

Saudi Stock Market Declines

The Saudi stock market, also known as the Tadawul, fell on Sunday, reversing some of its gains from earlier in the week. The benchmark Tadawul All Share Index (TASI) dropped by 0.7%. Analysts said the decline was mainly due to profit-taking, a common practice where investors sell some of their shares to lock in gains after a strong rally.

Major companies contributed to the fall. Al Rajhi Bank, one of the largest banks in Saudi Arabia, saw its stock price fall by 3.2%, while Saudi National Bank dropped by 3%. These declines followed the biggest single-day gain in over five years on Wednesday, when the TASI jumped 5.1%.

The earlier gain had been fueled by speculation that regulators might ease the 49% foreign ownership cap on listed companies. Easing this cap would allow more foreign investors to buy shares in Saudi companies, which could boost market liquidity and bring new capital into the kingdom.

Despite Sunday’s losses, analysts pointed out that the Saudi stock market remains on a long-term growth path. The kingdom continues to implement economic reforms under its Vision 2030 program, which aims to diversify the economy beyond oil. These reforms include encouraging private sector investment, improving regulatory frameworks, and opening sectors to foreign investors.

Key Factors Affecting Saudi Markets

Several factors contributed to the recent movements in Saudi Arabia’s stock market:

Profit-Taking by Investors
After the large rally earlier in the week, investors were selling shares to secure profits, causing a temporary dip in stock prices.

Foreign Ownership Rules
Speculation about changes in foreign ownership limits drove the earlier rally. Investors hope that easing the 49% cap could attract new international investment.

Bank Performance
Banks such as Al Rajhi and Saudi National Bank play a central role in the Saudi market. Their share price movements often influence the overall index.

Global Oil Prices
Although Saudi Arabia’s economy is heavily tied to oil, the stock market reacts not only to oil prices but also to regulatory and economic news. Rising oil prices generally support market confidence, while uncertainty about regulations can cause short-term fluctuations.

Qatar Stock Market Rises Slightly

In contrast to Saudi Arabia, Qatar’s stock market showed a modest gain. The QSI index rose by 0.2%, supported by a 1.3% increase in Qatar Islamic Bank shares.

Qatar’s market was positively influenced by rising oil prices, which were affected by recent Ukrainian drone attacks on Russian energy facilities. These attacks caused concerns about global oil supply, which in turn led to higher crude prices. Higher oil prices benefit Qatar, as the country is a major exporter of both oil and natural gas.

Analysts noted that the Qatari market remains resilient despite regional uncertainties. Investors are closely watching developments in energy markets, as Qatar’s economic performance is closely linked to oil and gas revenues.

Egypt’s Stock Market Also Shows Gains

Elsewhere in the region, Egypt’s EGX30 index rose 1.4% on Sunday. The main driver of the increase was a 1.9% gain in Commercial International Bank (CIB) shares. This came after the bank’s shareholders approved a plan to use general reserves to increase its capital by 3.07 billion Egyptian pounds ($63.83 million).

The decision to boost capital strengthens CIB’s financial position, enabling it to support growth, lending, and investment in the Egyptian economy. Analysts said that the positive performance of Egypt’s banking sector contributed to overall investor confidence in the market.

Regional Market Overview

The Gulf and Middle East stock markets have been influenced by a combination of domestic, regional, and global factors. Investors are closely monitoring economic reforms, oil prices, geopolitical events, and regulatory changes.

• Saudi Arabia: The market showed volatility due to profit-taking and ongoing speculation about foreign ownership rules. Large banks significantly influenced the index.
• Qatar: Oil-related gains supported market performance, with energy-linked companies benefiting from higher crude prices.
• Egypt: Capital-boosting measures in the banking sector contributed to gains, reflecting investor confidence in financial institutions.

Oil Prices and Their Impact

Oil remains a key factor influencing Gulf markets. Recent geopolitical developments, particularly attacks on Russian energy facilities in Ukraine, contributed to higher crude prices.

Saudi Arabia: While domestic regulations and profit-taking influenced short-term market movements, rising oil prices continue to support long-term economic stability.

Qatar: As a major oil and gas exporter, higher energy prices directly benefit state revenues and corporate earnings, which positively affect the stock market.

Investor Strategy: Many investors in the region monitor oil prices closely. Gains in crude prices often encourage buying in energy-related companies, while dips may trigger profit-taking or caution.

Importance of Foreign Ownership Rules

A key theme driving Gulf stock markets is the potential easing of foreign ownership limits. Currently, foreign investors can own up to 49% of shares in Saudi-listed companies. Speculation that this limit might be relaxed has led to increased trading activity and short-term rallies.

Impact: Allowing higher foreign ownership can attract international capital, increase liquidity, and improve market depth.

Investor Sentiment: Speculation about rule changes creates both opportunities and risks. Investors may buy shares ahead of reforms, but profit-taking can cause temporary dips.

Sector Analysis

Several sectors in Gulf markets have been particularly influential:

• Banking: Large banks such as Al Rajhi, Saudi National Bank, and CIB are critical to overall market performance due to their size and market influence.
• Energy: Oil and gas-related companies respond directly to changes in global energy prices, influencing overall market trends in Qatar and Saudi Arabia.
• Real Estate: Real estate companies in Saudi Arabia and Qatar also reflect investor confidence, particularly as foreign investment rules evolve.

Investor Sentiment

Investor sentiment in the Gulf remains cautious but optimistic.

Cautious: Profit-taking in Saudi Arabia reflects cautious behavior, especially after rapid gains. Investors are aware that sudden regulatory changes or geopolitical risks could influence markets.

Optimistic: Rising oil prices and regional economic reforms provide reasons for optimism. Investors see opportunities in energy, banking, and capital-raising initiatives.

Analysts recommend monitoring both short-term market fluctuations and long-term economic reforms to make informed investment decisions.

Geopolitical Factors

• Gulf markets are sensitive to regional and global political developments.
• Ukraine Conflict: Drone attacks on Russian energy infrastructure have influenced oil prices, indirectly benefiting Qatar’s market.
• Middle East Tensions: Regional conflicts, policy changes, and diplomatic developments can impact investor confidence.
• Global Economy: Economic trends in the United States, Europe, and Asia influence trade, investment, and energy demand in the Gulf.

Looking Ahead

• The coming weeks are expected to bring continued market activity and potential volatility. Key factors to watch include:
• Regulatory Updates: Decisions regarding foreign ownership limits in Saudi Arabia may create new investment opportunities.
• Oil Prices: Global crude prices will continue to influence market trends, particularly in energy-dependent economies like Qatar.
• Banking Sector Moves: Capital-raising initiatives in Egypt and Saudi Arabia can affect investor confidence and market direction.
• Regional Developments: Geopolitical tensions or resolutions may have immediate effects on market sentiment.
• Investors are advised to remain informed about both regional news and global economic indicators to navigate potential market changes effectively.
• Gulf stock markets showed mixed results on Sunday, September 28, 2025.

Saudi Arabia: The Tadawul experienced a 0.7% decline due to profit-taking, despite previous large gains driven by speculation about easing foreign ownership rules. Large banks, including Al Rajhi and Saudi National Bank, saw notable declines.

Qatar: The QSI index edged up 0.2%, benefiting from rising oil prices influenced by geopolitical events in Ukraine. Qatar Islamic Bank led gains in the banking sector.

Egypt: The EGX30 index rose 1.4%, driven by Commercial International Bank’s capital-boosting initiative, signaling positive investor sentiment.

Overall, Gulf markets are influenced by a combination of profit-taking, regulatory speculation, oil prices, and regional developments. Investors remain cautious in the short term but are optimistic about the long-term economic reforms and potential for foreign investment in the region.

The coming weeks will be important for monitoring how regulatory changes, oil price movements, and regional developments affect market performance. While Saudi Arabia experienced a temporary dip, Qatar and Egypt showed resilience, highlighting the diverse dynamics across Gulf and Middle Eastern financial markets.

Saudi stock market Tadawul Al Rajhi Bank