Domestic consumption slows, but still healthy

Real estate development was the best performing sector last month in the Saudi stock market and it benefited from positive outlook for the sector, according to a report from Jadwa Investment.
New regulations introduced by the Capital Market Authority and lower turnover pulled speculative sectors down, it said.
Jadwa Investment said the Tadawul All-Share Index (TASI) rose in May, the third consecutive monthly increase.
Average volumes fell to SR 5.5 billion down from SR 6.6 billion, an 11-month high in the previous month.
Despite the monthly improvement in TASI, Jadwa said the index still lags behind other GCC and global markets.
Eleven of the 15 sectors were up last month.
Data for April indicate slowing, though still healthy, domestic consumption. Most indicators were up in year-on-year terms, though lower than the record highs registered in the previous month. Cement sales in April also retreated from their all-time high in March.
Bank claims on the private sector accelerated in both month-on-month and year-on-year terms in April.
A jump in credit and investment in private sector securities contributed the most to this expansion. The contribution of long-term lending to overall credit growth also increased, Jadwa said.
Bank deposits maintained a strong annual growth in April. Most additional deposits are allocated to demand deposits while the share of time and saving deposits remains low. Loan-to deposit ratio slightly declined in April to 80.4 percent, according to the report.
It said higher food inflation caused year-on-year inflation to increase slightly in April while Jadwa’s estimate of Saudi core inflation, which excludes food and housing-related services, eased.
Food inflation accelerated to a long-term high, but rental inflation decelerated, Jadwa said.
It said nonoil exports jumped in March, with petrochemical exports recovering from their February low level, though in year-on-year terms nonoil exports contracted. Imports were up on their February total in March, with food products recording the largest gain.
Brent crude oil prices moved within a small range of $100-105 per barrel in May.
“We don’t expect a major change in the Kingdom’s expansionary fiscal policy at these oil prices, though the risks to prices are on the downside owing to rising supply and subdued global demand,” Jadwa Investment said.