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G7 meeting improves confidence
With the G7 meeting aiming to reinstate confidence in the world's financial systems, markets worldwide have responded positively.
- By Mariam Al HakeemCorrespondent
- Published: 23:47 October 16, 2008
Riyadh: With the G7 meeting aiming to reinstate confidence in the world's financial systems, markets worldwide have responded positively.
The Saudi Stock market followed suit, especially after the meeting of the heads of central banks and finance ministers of the G-20 which includes Saudi Arabia.
Moreover, the confirmation of the soundness of the economy in the GCC was reiterated by the chairman of the region's central banks which positively affected investor confidence leaving the Tadawul all share index up 17 per cent in Monday's and Tuesday's trading.
Furthermore, Saudi bank profits were up 2 per cent in the first nine months of 2008 compared to the first nine months of 2007.
Quarter down
However, third quarter results were down 17 per cent from the second quarter, owing to a multitude of factors, most importantly, the high provisions that the banks set aside in order to compensate for any potential losses in their investment portfolios, the reduction in income from the bank's brokerage arms resulting from a reduction in trading activity and the imposed limits on how much they can lend in the efforts of curbing inflation.
It is worth mentioning that the obligated reserve on deposits was reduced from 13 per cent to 10 per cent which raises liquidity in the local economy and provides more loans which would help companies growth.
The Tadawul hit 6,863.15 on Wednesday, up 11.4 per cent from last week. Yesterday the index was 37.8 per cent lower than the year's start. Trading reached 43.9 billion riyals, up against last week's 13.7 billion riyals.
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