Saudi Stocks Surge Over 5% in Wednesday Rally

Saudi markets ignite with explosive midweek momentum.

Market Mechanics Unpacked

Trading floors buzzed as the Tadawul index catapulted past the 5% threshold—no minor feat for a market of this scale. The surge defied regional headwinds, showcasing resilient investor appetite despite global economic jitters.

Behind the Numbers

That double-digit percentage leap translates to serious capital movement. We're talking institutional money making decisive moves, not just retail speculation. The volume patterns suggest sustained momentum rather than flash-in-the-pan activity.

Regional Implications

When Saudi markets move, the entire Gulf Cooperation Council pays attention. This performance creates ripple effects across Middle Eastern exchanges—and potentially shifts asset allocation strategies for international funds eyeing emerging markets.

Of course, traditional finance types will call this 'volatility' while quietly updating their spreadsheets. Because nothing makes a banker reconsider their crypto skepticism quite like double-digit gains in a single session.

Foreign cap rumors drive massive stock inflows

The potential rule change WOULD open Saudi’s doors wider to foreign capital, especially from index-tracking funds like MSCI and FTSE. If foreign ownership hits 100%, UBS projects that the market could attract between $9.5 billion and $10 billion in passive inflows. Victor Martin, UBS’s head of portfolio trading in EMEA, said those inflows would hit fast once the rules change.

Big names like Saudi Aramco, despite being a symbol of the country’s market power, haven’t been able to hold ground. Its stock is down around 10% year-to-date, part of the broader weakness in large caps.

Mohammed Ali Yasin, the CEO at Ghaf Benefits (under Lunate), pointed out that “even with the 49% cap, foreigners never really cross 15% ownership in most large caps.” But he said expectations are shifting fast.

The momentum is now driven by hopes that foreigners will pour more money into these listed firms once the caps are gone, and not just small stakes. These flows could raise Saudi’s weight in global indices, pushing prices higher, and making the exchange more appealing to big international funds.

This isn’t the first step either. Saudi has already tried to attract foreign investors by launching exchange-traded funds in partnership with Japan and Hong Kong. Another major shift came in January, when regulators gave foreigners the green light to buy listed firms that hold real estate in Mecca and Medina, though the law still blocks direct ownership of land in those two holy cities.

Saudi momentum lifts emerging stocks as Powell pressures currencies

As Saudi’s stocks ripped higher, global markets noticed. The MSCI benchmark for emerging market equities ROSE 0.4%, extending its winning streak to three days, now sitting at its highest level since July 2021. It wasn’t just Saudi fueling that push.

Alibaba surged to a four-year high after boosting its AI investments, and Tencent followed suit. But the real weight came from the Saudi banks, which dominated Wednesday’s performance.

On the currency side, it was the opposite story. Most emerging market currencies lost ground, after Federal Reserve Chair Jerome Powell struck a cautious tone in his comments. The Bloomberg dollar index rose 0.4%, as Powell said the Fed faces a “challenging situation” balancing inflation and labor market risks. That tone crushed bets for a rate cut next month, and investors backed off risk trades.

In eastern Europe, the Polish zloty and neighboring currencies took a hit, dragged down by increased Russia-NATO tensions over reported airspace violations. At the same time, the Thai baht fell after new data showed the country’s export growth hit its slowest pace in almost a year, pressured by U.S. tariffs.

Investors in Czech Republic kept their eyes on the central bank, which was widely expected to hold interest rates steady. A hawkish signal from the board could offer support to the koruna, one of the region’s strongest currencies against both the euro and the dollar so far this year.

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