Samer Choucair: Rising Liquidity Despite Tadawul’s Decline Signals Capital Reallocation
Investment strategist Samer Choucair said that the Saudi main market index, TASI, falling 2% over the week—its sharpest weekly decline in three months—does not necessarily indicate that liquidity is leaving the market. Instead, it points more strongly to selective repricing and a redistribution of investment positions across sectors and companies based on earnings quality, performance expectations, and the cost of capital.
Choucair explained that TASI ended the week at 10,590 points, down approximately 214 points, after trading between 10,497 and 10,824 points. At the same time, weekly trading value increased by 10.3% to SAR 20.55 billion, with an average daily turnover of SAR 4.11 billion, compared with approximately SAR 3.73 billion the previous week.
He noted that the simultaneous decline in share prices and increase in trading value is a direct indication that liquidity has not left the market. Rather, investors have been reallocating capital and rebuilding positions according to more selective criteria.
Choucair said the market initially attempted to move higher but failed to maintain its momentum, before selling pressure intensified during the middle of the week and the market staged a partial rebound on Thursday. In his view, this pattern reflects internal reassessment more than a broad-based exit from the market.
He added that investors have reassessed companies based on quarterly earnings and expectations for future performance, with more than half of trading concentrated in the banking, basic materials, and energy sectors, while the cost of liquidity has become a more influential factor in allocation decisions.
Rising Liquidity Despite the Market Decline
Samer Choucair explained that the increase in trading value alongside the decline in the index is one of the most important indicators of the current market dynamic.
He said the market is moving from broad-based trading toward a more precise redistribution of capital among individual companies and sectors.
> “The institutional investor does not leave the market when trading volume rises as prices decline; rather, the investor rebuilds portfolios based on a genuine distinction between companies with resilient profit margins and those facing operational or pricing pressures.”
Choucair added that this behavior reflects a change in how investors interpret the market, with earnings quality, the ability to preserve operating margins, and the capacity to manage financing costs becoming more important than the overall movement of the index.
He noted that the cost of liquidity has become a central element of the investment decision-making equation, particularly following volatility in three-month SAIBOR, which rose to 5.09% before declining by 22 basis points to 4.87% after the Federal Reserve maintained its policy rate in the 3.5%–3.75% range.
Choucair explained that SAIBOR’s movement reflected market uncertainty ahead of the Federal Reserve decision, followed by relative relief after rates were held steady. This could ease some pressure on financing costs and provide investors with greater visibility into the liquidity outlook.
Internal Repricing Across Sectors
Samer Choucair said sector performance during the week provides a clear picture of selective repricing.
The banking sector declined 1.71%, with pressure reaching its peak on Wednesday at 2.44%.
Choucair explained that Al Rajhi Bank shares fell 2.2%, while Riyad Bank declined 3.5%, and SNB shares fell by less than 1%.
He noted that some banking stocks were affected by ex-dividend dates, which resulted in immediate price adjustments. These short-term movements, he emphasized, should not be interpreted separately from the sector’s underlying fundamentals.
Choucair added that the basic materials sector declined 3.78%, driven by a 6.2% fall in SABIC shares after the company reported quarterly losses that missed market expectations.
The insurance sector recorded the largest decline, falling 7.45%, led by Tawuniya, which dropped 12.6% after reporting results below expectations.
By contrast, the healthcare sector was the week’s strongest performer, rising 4.35%, supported by a roughly 9.3% increase in Dr. Sulaiman Al Habib Medical Services shares.
Choucair noted that divergence extended across a broader group of stocks. Solutions by stc rose 6.4%, SAL increased 5.1%, and Americana Restaurants gained 5.7%, while Saudi Industrial Investment Group declined 9.3% after reporting a loss instead of the profit expected by the market.
He emphasized that these movements confirm that the selling wave was not indiscriminate. Rather, it was associated with genuine internal repricing based on earnings quality and the future outlook for individual companies and sectors.
Cost of Capital and Its Role in Investment Decisions
Samer Choucair explained that the cost of capital has become a more visible factor in investment decisions, particularly amid movements in domestic and global interest rates.
He noted that investors have become increasingly sensitive to borrowing and financing costs, directly affecting the valuations of companies that rely on external financing or carry elevated levels of debt.
Choucair added that the decline in SAIBOR following the Federal Reserve’s decision could create room for an improvement in risk appetite, but it does not eliminate the need to monitor interbank borrowing costs, particularly over the medium term.
He said that ex-dividend dates for banking stocks added another layer of short-term volatility, but did not alter the market’s structural direction.
> “In markets such as Tadawul, where the relative weight of large-cap stocks plays a significant role, focusing on earnings quality becomes more important than simply tracking the movement of the overall index.”
Choucair emphasized that relying solely on index movements can lead to an inaccurate reading of capital flows, particularly when market movements are driven by significant changes in a limited number of high-weight stocks.