Market Update: TASI defies global markets and adds $192bn despite regional conflicts  – Full Analysis

RIYADH: The market capitalization of Saudi stocks rose to its highest level in nearly a year, adding approximately SR722 billion ($192.3 billion) during March 2026 to reach SR9.86 trillion, ending the month on a positive performance that contradicted the trend of most global markets despite the military conflict in the region. 

This performance came as the TASI index rose about 5 percent during March to close at 11,250 points, supported by gains in most market components, led by Saudi Aramco and Al-Rajhi Bank. 

In contrast, all MSCI Gulf market indices declined except for Saudi Arabia, while stock indices in Asia and Europe also fell, along with the broader S&P 500 index measuring US stock performance. 

The positive performance of Saudi stocks coincided with a 20 percent growth in trading value to reach SR104 billion, despite the month including the Eid al-Fitr holiday. The banking, basic materials, and energy sectors led activity in terms of liquidity, capturing approximately 23 percent, 20 percent, and 13 percent of total trading values, respectively. 

The counter-trend against global markets resulted from economic stability, as oil and gas production did not halt, international trade continued, and the flexibility of the logistics infrastructure enabled trade via the western coast. 

Positive performance despite military conflict 

TASI’s resilience during March aligned with Al-Eqtisadiah’s analysis regarding the market’s ability to absorb geopolitical shocks, as domestic factors limited the impact of regional tensions on the economy and market.  

Key factors include Saudi military readiness, the efficiency of air defense systems in protecting economic assets and ensuring business continuity, along with advanced logistics infrastructure and multiple transport and export outlets — including flexible oil exports via the East-West pipeline away from the Strait of Hormuz. 

Historically, the Saudi market has shown the ability to absorb the initial shock of conflicts and quickly return to fundamentals, where corporate profitability, economic resilience, and continued spending and consumption remain the main drivers of valuations.  

Additionally, rising oil prices during periods of tension support public finances and economic growth, explaining the market’s positive trajectory despite regional turmoil. 

Sustainability of performance depends on earnings growth 

However, sustaining this performance depends on improving corporate earnings. As the earnings season ended, data showed listed companies excluding Saudi Aramco recorded their lowest quarterly profits since 2020 in the fourth quarter of last year, with profits declining about 63 percent to nearly SR16.5 billion, pressured by losses in the basic materials sector — particularly petrochemical companies — along with non-recurring items affecting STC’s results, according to Al-Eqtisadiah’s financial analysis unit. 

With the disclosure deadline passed, a new earnings season has begun, with the market trading at a price-to-earnings ratio of 23 times excluding Aramco — a level that pressures expected returns for investors and limits market attractiveness. 

With interest rates stabilizing at relatively high levels and the possibility of further increases if inflation continues accelerating in the US, required returns for investors rise, reinforcing the importance of earnings growth as a key factor in supporting stock prices at elevated levels. 

From a technical perspective, the market may face increasing selling pressure at 11,300–11,400 points. If catalysts that raise corporate earnings growth expectations for this year do not emerge, the market may find it difficult to sustain its positive performance in the coming period.