3 sectors dominate
3 sectors dominated 92% of the market companies’ profits, led by the energy sector led by Aramco, whose profits represented 79% of corporate profits, followed by the banking sector with 7%, and the petrochemical sector with 6%.
The number of companies listed in the main Saudi stock market is 200 companies distributed over 20 sectors, of which 3 companies whose shares are suspended, namely Al-Sager Insurance, Cables and Thimar, in addition to 11 companies whose fiscal year differs from the rest of the companies, which ends in December of each year, which are the centers companies Al Arabiya, Makkah Construction, Atheeb Telecom, Sadafco, Al Hokair, Abu Moati, Tihama archyde news, National Education, Ataa Educational, Al Yamamah Steel, Al Sharq Pipes.
The record growth in corporate profits came thanks to the increase in the profits of the banking sector, which in turn increased by supporting the rise in income from the main operating activity, which is the net special commission income – net interest income from loans, financing and investments – which coincided with the increase in the average interest rates among Saudi banks (SAIBOR). From 0.79% in the second quarter of 2021 to 2.17% in the second quarter of 2022.
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interest rates
The Saudi Central Bank raised interest rates twice during the second quarter of this year, the first time from 1.25% to 1.75% during the month of May and the second during the month of June from 1.75% to 2.25%.
The significant growth in corporate profits, especially the mining sector, boosted the company Saudi Arabian Mining (Maaden), owned by the Saudi sovereign fund by 67.2%.
Ma’aden’s record profit growth is due to the increase in the average selling prices achieved for all products except industrial metal products, and the increase in the quantities sold mainly of ammonia, basic aluminum, ammonia phosphate fertilizers, industrial metal products and gold, with a slight decrease in the quantities sold of flat rolled products and alumina as well as Meridian products.
see more: Saudi stocks attract “bulls” amid high oil prices and interest
face inflation
Mazen Al-Sudairi, head of research at Al-Rajhi Financial Company, said in an interview with Al-Sharq channel that there are sectors that are candidate to face or benefit from the rise in inflation during the coming period, such as companies in the medical and health care sector, in addition to energy companies, led by Saudi Aramco, which will benefit. Even if oil prices fall below 100, supported by the decline in concession rights for the Saudi government.
The petrochemical sector will also benefit, due to the rise in gas prices, especially companies that produce fertilizers, such as SABIC for agricultural nutrients and Ma’aden. And the fourth sector in the banking sector, which will achieve growth thanks to the rise in interest rates.
As for the sectors that will witness a decline in profits, Al-Sudairy mentioned the retail sector, due to the change in the consumption behavior of individuals and society in general.