Saudi Arabia permits GCC residents to invest in its main stock market Tawadul - thoughts?

[OKboomer]

Seeing this news today. Basically, anyone with a UAE/GCC residence card can invest in Saudi stock market now.

Anyone has any thoughts on it? Would you punt money there? Do you think UAE based foreigners will look for Saudi stocks to play with and pump them?

Anyone has experience generally with investing in Saudi public companies? Would English alone be feasible, or reporting only in Arabic?

 

[Martin Everson]

Anyone has any thoughts on it?

I would need to take a look. Saudi stock exchange has never crossed my mind and I have no experience with it. Would be interested also to know what others think.

https://www.saudiexchange.sa/wps/portal/saudiexchange/ourmarkets/main-market-watch

 

[OKboomer]

Their SPX equivalent, TASI, is currently at the same price levels as 20 years ago (!..), don't know what to make of it. People always say Saudi money will pump bitcoin, etc, but why wouldn't Saudis pump their own stock market?
Not sure if possible, feasible or even necessary to try to value their stocks based on fundamentals or P/E etc

 

[Martin Everson]

People always say Saudi money will pump bitcoin, etc, but why wouldn't Saudis pump their own stock market?

How you mean? The Saudi stock market is actually one of the biggest in the world. Bigger than Germany etc and only just behind UK.....lol

https://www.ceicdata.com/en/indicator/saudi-arabia/market-capitalization

Not sure if possible, feasible or even necessary to try to value their stocks based on fundamentals or P/E etc

I don't even know what drives the prices as a lot of the names on the exchange I have not heard of apart from Saudi Aramco.

 

[OKboomer]

@Martin Everson , I didn't know Saudi stock market was bigger than Germany's, but even so, would they not pump liquidity to make their stock market go up? Isn't TASI being at the same price as spring 2005 sending a very bad signal to investors ? (I.e. had you held for 20 years you would be at exactly break even now?... Compare that with SPX which has returned 5.3x since spring 2005 for instance? Even the British not so well performing FTSE is up 1.83x since then
So why would it be attractive to invest in Saudi stocks with such prior performance?

 

[Martin Everson]

, I didn't know Saudi stock market was bigger than Germany's, but even so, would they not pump liquidity to make their stock market go up? Isn't TASI being at the same price as spring 2005 sending a very bad signal to investors ? (I.e. had you held for 20 years you would be at exactly break even now?...

They probably have pumped in billions already but opening up to GCC residents etc may be first step in internationalizing their stock market and bringing more liquidity etc. The landscape may look different a decade from now if they open up further.

Compare that with SPX which has returned 5.3x since spring 2005 for instance?

Most of stocks on SPX are zombie corporations drowning in debt and just rolling debt over with cheap money while running crazy P/E ratios. Or companies issuing debt to conduct share buy backs etc which is basically market manipulation in my books. Wild west with crazy valuations and no real fundamental value for an investor. Just buying teh SPX closing your eyes and watching it go up as it always historically goes up is no strategy I personally want to pursue long term .

https://stockwatchwire.com/archives/1163

Also the average P/E ratio of Saudi Tadawul is half that of S&P 500. Ultimately it requires investigating the Tadawul further as I don't know much about it.

 

[Frankie]

Most of stocks on SPX are zombie corporations drowning in debt and just rolling debt over with cheap money while running crazy P/E ratios. Or companies issuing debt to conduct share buy backs etc which is basically market manipulation in my books. Wild west with crazy valuations and no real fundamental value for an investor. Just buying teh SPX closing your eyes and watching it go up as it always historically goes up is no strategy I personally want to pursue long term .

"Most of the stocks on the S&P 500 are zombie corporations drowning in debt"

Factually incorrect. Feel free to ask GPT and you will see that "zombie companies" are no more than 4% than the S&P 500 companies.

Also, didn't you recommend in April 2020 to buy RIT Capital Partners instead of buying Berkshire Hathaway...
Let's look again how did they do since April 2020?

RCP: 0%
BRK: 156%
S&P: 130%

Just a reminder that people can know a LOT about Offshore banking but have the worst track record when it comes to investments (that keep being proven false but they keep issuing predictions)

 

[OKboomer]

So what do you reckon about just buying TASI index to keep it simple ?