Financial analysts confirmed that the decline in profits of a number of listed companies in the Saudi stock market represents long-term investment opportunities for investors, with positive signs that will improve the prices of companies whose profits declined in the third quarter, especially sectors such as cement and retail.
They told Al-Eqtisadiah that the market is enjoying attractive profit through re-buying in some sectors that can be acquired from investors rather than speculators at the current stage.
Abdulla Al Barrak, Financial Analyst, said that the banks, which have announced profits so far, showed growth of 9 per cent, compared to profits for the same quarter last year, as well as the petrochemical sector achieved a profit growth of 35 per cent.
These two sectors managed to offset the decline in profits of other sectors such as Cement that fell about 60%, and retail sector fell 8% for the third quarter of 2018, compared to the same quarter of last year, as well as a severe decline in the construction sector.
He pointed out that there is a continuous growth in the other sectors.
He added, "Overall, the banking sector with the petrochemical sector are replacing the profits of the rest of the low-end companies in the market, so the index is now based on gross profit in the market."
He pointed out that the performance of the market, compared to the profits achieved so far, is very logical, and the prices are at fair areas.
He continued, "The general view of the market is neutral tend to positive."
He said that any improvement in the retail sector or the cement sector will reflect positively on the profits of the market, and there will be improvement in sectors that are still affected so far, which represent long-term investment opportunities for investors.
Therefore, there is now a difference in the market between opportunities and prices, especially as the profits of some companies offset the shortfall in profits of other sectors.
Dr. Khalid Al-Banal, Professor of Finance and Economics at King Fahd University of Petroleum and Minerals, said that the Saudi stock market is still heavily linked to fluctuations in oil prices, primarily in the case of high oil prices will reflect positively on the Saudi economy, which in turn will be reflected positively in the performance of the stock market.
He pointed out that the listed sectors, which are non-oil. in one way or another are indirectly linked to the oil sector, which is still the main factor affecting the performance of the Saudi stock market, as well as other annual economic factors and decisions.
He explained that corporate profits are a reflection of the performance of the economy as a whole.
He pointed out that these profits will improve in the near future, especially petrochemicals and other sectors.
Ahmed Al-Mulhim, a financial analyst, said that although the market index has fallen in previous sessions, investors' eyes will be on companies whose prices and profits in the third quarter have fallen and considering them as investment opportunities in the distant future.
He pointed out that the stocks that have fallen in prices, which affected the profits of some companies, necessarily will improve in the near future. Therefore, they may be an opportunity for investors to make future profits to compensate for any financial losses suffered as a result of their investment in sectors decreased profits of their companies in the past months.
