Nervousness is quickly subsiding and investors are returning to the Saudi stock market picking up value stocks, according to a top Riyadh-based economist.

“Real estate is viewed as a growth sector by many investors given the government's commitment to housing and more recently specific company stories such as latest news of Al-Argan housing projects across the Kingdom,” John Sfakianakis, chief investment strategist at Masic, a Riyadh-based investment firm, told Arab News.

The Real Estate Development stocks gained 3.57 percent on Sunday as the Tadawul All-Share Index (TASI) climbed 1.45 percent to 7,878.74 points, heading for its third gain following a 654-point correction early last week.

At the end of August, TASI closed at a level of 7,766.52 points, losing 148.59 points (1.88 percent) over the close of the previous month.

Sfakianakis added: “August was an unusual month given the geopolitical context of the situation in Syria. There is enough evidence that the stock market will continue its uptick as long as geopolitics is not at center stage and volumes continue to remain strong.”

However, Fahad Alturki, head of research at Jadwa Investment, says the negative sentiment is likely to weigh on the market for a few more weeks leading to higher volatility until the political picture becomes clearer.

“The escalation of the unrest in Syria, the increasing likelihood of a US-led military intervention and fears of it spreading outside Syria have weighed on the general sentiments of the market on the last week of August pushing the market down, though the market remained higher in year-to-date terms,” he said.

“The drop was larger in smaller sectors while sectors with relatively strong economic fundamental suffered less, and other stocks fell on the back of profit-taking, following an extended period of good performance,” Alturki said.

According to Tadawul’s monthly statistical report, on an YTD basis TASI registered a positive increase of 14.19 percent (965.30 points). Highest close level for the index during the month was 8,214.85 as on Aug. 21.

The report said total equity market capitalization at the end of August reached SR1.54 trillion ($411.58 billion), decreased by 1.32 percent over the close of the previous month.

The total value of shares traded for the month of August reached SR93.47 billion ($24.93 billion), dropped by 12.18 percent over the previous month.

The total number of shares traded reached 3.84 billion during the month of August 2013 compared to 4.09 billion shares traded for the previous month, declined by 5.99 percent.

The Tadawul report said total number of transactions executed during August reached 1.84 million compared to 2.06 million trades for the month of July 2013, falling by 10.85 percent.

Trading days during August numbered 16 as against 23 trading days during July.

On Sunday, petrochemical shares supported the rally as the sector's index rose 1.28 percent. Saudi petrochemical stocks tend to track oil prices, with crude impacting their bottom line, Reuters said.

Fluctuation in oil prices will have a big impact on bourses in Saudi Arabia and other Gulf countries. International oil experts have said that the US plan to launch an air strike on Syria would not affect the Kingdom’s oil exports.

“Saudi Arabia has outlets to export its oil away from the flashpoints in the region,” Al-Riyadh Arabic daily quoted one expert as saying.

The International Energy Agency said that there was no need for an emergency oil stock release as markets were well supplied, despite the run-up in prices. Brent oil prices have been mostly on an upward rise since mid-April, with exports from Libya falling to the lowest level since the 2011 civil war.