The Impact of Ramadan to Saudi Stock Market

We discovered that the Ramadan features quantified by its own indicator TASI once we examined the eight years’ stockmarket statistics. Amounts and the indicator levels stick to a downtrend fad from the in addition to at the two weeks of this month. We think that is due to two reasons:
1) retail merchants, that participate in the Stock Exchange from most, liquidate holdings to Satisfy additional expenditures incurred throughout the festival, along with also
2 ) other shareholders expect share prices to diminish combined with gloomy volumes and, so, attempt to realize gains

The amount of stocks traded starts to diminish at least monthly before to Ramadan. Below the average volumes remain Throughout the month. After the next week, volumes start to show upward. We feature to investors seeking to construct positions in expectation of growth together side an in trading activity subsequent to a holiday in TASI levels season. Interestingly volumes climbed ~38 percent at the month after Ramadan weighed against the volume throughout the calendar thirty day period.

We see that a similar pattern at TASI degrees because of its Ramadan effect. Normally, the indicator declines 0.6percent between your 2 weeks ahead to Ramadan and the very first week at this festival. Afterward, it appears stays flat from the subsequent fourteen days, until picking up a mean of 2.9percent in the fourth week.

But the prior few years reported that a positive prejudice where ordinary volumes ended up flat-to-up throughout the sacred month. The Ramadan blueprint has been twisted because of favorable spillover impact of endorsement of entire earnings season, their mortgage law and statement of the economy starting to QFI.

Sectors favorably impacted Throughout Ramadan

  • Food industry: Food and Agriculture industry gains a mean of 6 percent throughout the festival that we believe is directed by higher usage of principles at the runup into Ramadan in addition to through the sacred month. The heavyweight, Almaraz, is upward as an important 33 percent of its earnings on average result out of per quarter by. As Hajj and Ramadan generate to the provider Savola is up 10.
  • Retail industry: Retail stocks report strong execution during the sacred month generally thanks to high discretionary spending, with all the industry an average of gaining 4 percent in this time. Since Ramadan is the business season retail heavy-weight Al Hokair is upward an average of 10 percent and also the quarter creates a 40 percent of their entire earnings.
  • Hotel & Tourism: Also the Hotel and Tourism industry increases a mean 4 percent throughout the entire month of Ramadan, having an escalation in domestic demand along with a greater variety of international people driving occupancy in hotels.

Sectors negatively affected Throughout Ramadan

  • Banks: The Banking industry generally remains flat because of fewer working hours, a decline in demand for loans and a lull on the industry trading activity.
  • Structure: Building businesses set a subdued operation during the entire month of Ramadan as many construction organizations generally freeze work thanks to devoting working hours according to the labor policy.
  • Cement: The spillover result of subdued structure activity is sensed throughout the cement industry, where average annual revenue volume drops by 32 percent during Ramadan i.e. 2.8 mn tons compared with a yearly average of 4.1 mn tons.

Technical View: Suggest a Probable BounceBack in near-term

The TASI traded using a poor prejudice to terminate your afternoon 0.74percent lower at 9,275.27. The indicator was retracing the uptrend within the last day or two, as noticed in the graphs. Currently, it’s coming to the 50 percent (9,190) and 61.8percent (9,028) retracement grades. Thus, the correction could stop and industry could combine together with likely retrieval, close service levels. Buying may emerge in those levels. RSI is approaching zone, implying extent. We have been of opinion that the pullback from the upcoming day or two can’t be eliminated. The second area of resistance is approximately 9,550 and 9,770. It is also important to ensure your markets like what other company did. There are offers that you can use like questrade offer code.

On assessing the operation of this TASI within a protracted time period, we found that it diminished in December 2014 and published a low of 7,225.83. Finally, the index found support close to the 50% retracement level of 4,068 & 11,159.50. Ever since that time, it’s trading under the degree that is said. MACD lineup is currently hovering indicating a tendency that is medium-term to stay favorable. Over the graphs, Additionally, we’re currently seeing that the indicator is currently earning higher lows and higher highs. Unless we obtain the close Thus, the trend will stay. Contemplating that the interval, we believe buying may emerge in support levels.

Key historic tendencies in Ramadan to get TASI:

  • The decrease within a Couple of Days prior to the Start of the month of Ramadan
  • Continued to diminish through the olden times of this month of Ramadan: TASI extended reductions throughout the initials days. The trend Seen at the Center of this month
  • Buying emerged throughout the past few days of Ramadan
  • Downtrend reversed throughout the entire month of Ramadan and also the indicator exchanged using a favorable prejudice beforehand
  • The continuing increase was seen through the first days of this of this post-Ramadan
  • Thinking about the historical trends, we have been of this opinion that the short reversal change of this present downtrend will occur within the month of Ramadan. The indicator would exchange with bias post-Ramadan.
  • Ramadan trading blueprint at 2015 to follow historic tendencies

We believe the game in 2015 seen thus far from the weeks ahead to Ramadan is combined with all the historical pattern detected with volumes in addition to the TASI revealing a declining tendency. We expect historical trends to be followed by the trading blueprint. Therefore we expect trading activity to add momentum as we enter the next week of Ramadan once we believe TASI will report volumes in addition to that a spike in index levels. The investigation previously further supports this tendency.

 

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