Influence Of Oil Prices On Performance Of Saudi Stock Exchange
Bruce Powers | Aug 12, 2015 07:25AM ET
Influence Of Oil Prices On The Performance Of The Saudi Stock Exchange (Tadawul) Not As Strong As Many Think
A recent research report by Jadwa Investment titled ‘Oil Prices and the Saudi Stock Exchange (Tadawul)' shows a relatively small 35.5% correlation between the Tadawul and brent crude over eight years. Of course, correlation varies over different time frames, but their study shows less of an impact from oil prices on Saudi shares than is generally portrayed in the media.
Above is a two and a half year chart showing the relationship. You can see the divergence in price in early-July 2014 before the weight of falling oil prices pulled the Tadawul All Share Index (TASI) lower. Also, note that for the next two turns, the TASI led oil, bottoming first in late-2014 and dropping first through a trend line in June of this year (although not by much).
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