Saudi Arabia’s main stock index, TASI, declined 3.3% from the end of September to November 5, 2026, failing to capitalize on a 35% surge in third-quarter corporate earnings reported by Asharq Bloomberg.
Earnings Growth Masks Market Contraction and Yield Competition
- Concentrated Growth: Earnings expansion is heavily skewed toward a handful of sector heavyweights, masking broader market contraction.
- Yield Competition: Time and savings deposits diverted capital from equities.
- Geopolitical Pressure: Ongoing regional conflicts and rising financing costs continue to suppress investor risk appetite.
Earnings Concentration Masks Broader Market Decline
Combined profits for 181 companies reached 185.2 billion riyals, representing a 34.8% increase year-over-year, according to data compiled by Asharq Bloomberg. Excluding Saudi Aramco, profit growth remains robust at 19.2%. However, strip away Bahri and Petro Rabigh, and the total picture reverses into a 1.7% contraction, with these three entities capturing approximately 78% of all announced earnings.
Aramco’s earnings climbed from 97.3 to 137.4 billion riyals. Bahri surged from 513 million to 5.1 billion riyals, while Petro Rabigh shifted from a loss to a profit. Concurrently, real estate sector profits dropped 53.5%, food and beverages fell 20.7%, and telecommunications contracted 9.9%.
| Company / Sector | Q3 Metric | Performance Detail |
|---|---|---|
| Saudi Aramco | 137.4 Billion Riyals | Up from 97.3 billion riyals in Q3 |
| Bahri | 5.1 Billion Riyals | Surged from 513 million riyals |
| Real Estate Sector | -53.5% Profit | Muted performance across the sector |
Geopolitical Risks and Rising Deposits Drive Market Declines
Geopolitical risks weighed heavily on market sentiment during October, aligning with regional security concerns. On October 22, TASI closed at 9,696 points, marking its eighth weekly decline—the longest losing streak since 1994.
At the same time, fixed-income alternatives drew significant liquidity. Data from the Saudi Central Bank revealed that time and savings deposits tied to a yield rose to higher levels by the end of September, surpassing demand deposits for the first time since December 2008.
These time and savings deposits grew significantly since the beginning of the year and compared to September 2025, with portions owned by individuals and corporations. Government-backed Sah sukuk offered a fixed annual yield of 5.13% for a one-year term, presenting a risk-free alternative to volatile equities.
Valuation Multiples Reach Lowest Levels Since 2018
Market valuation multiples have compressed significantly. The price-to-earnings ratio fell to approximately 14.6 times, down from a three-year average of 17.9 times. Al Rajhi Capital reported that these valuations reached their lowest levels since 2018, narrowing the market’s premium over emerging markets to 6%, compared to the historical 24% average.
Banking Sector Profits Grow Despite Overall Declines
Aljazira Capital projected that the combined net profits of 66 companies under its coverage would decline by 2.7% year-on-year to an indicated total, while adjusted profits after excluding exceptional items would drop by only 1.5%, with profits expected to grow 10.7% compared to the second quarter.
The banking sector was projected to achieve a year-on-year profit growth of roughly 7.1% to reach a targeted sum, supported by loan and deposit growth alongside higher profit margins following US and Saudi monetary policy tightening. Transportation sector profits were expected to fall by more than 54% year-on-year as airlines and air transport services faced pressure, while Ma'aden's profits were projected to drop by about 14.2% due to price and profit margin pressures.
