The head of advice at GIB Capital, Abdullah Al-Hamid, said that the consumer price index data in America was positive and came below expectations, which gave a good feeling in the markets that the Fed’s policy is beginning to bear fruit.
He added in an interview with Al-Arabiya that inflation indicators in America include, in addition to consumer prices, house price indices, producer prices, and average wages, all of which measure inflation, and the aggregate result for them in general is positive, and I believe that investors today have an intention to carry risky assets. High not only in the stock markets, and this can be seen at the level of digital currency markets, commodity prices and oil in anticipation of a single interest rate hike this July, at the Federal Reserve meeting next week.
He pointed to the possibility of interest rates continuing at these levels for the coming period of this year until the middle of next year, and then the decline begins.
He stated that stability at a certain level gives positivity to the markets, and the performance of financial companies and banks in America improved yesterday and their performance was good, because the stability of interest rates directly benefits the banking sector and it is too early to celebrate the non-raise.
He added that as of this morning, about 92% of market analysts believe that there will be a rate hike in July by at least a quarter of a percentage point.
And he believes that the performance in the Saudi market is good, especially in sectors related to the local economy, because it is still growing at good rates, and during the past year it was one of the best economies of the Group of Twenty in terms of growth, and with low oil prices and production quantities, the GDP indicator of the Saudi economy is still positive. It exceeds 3% during the first five months of the year, and this gives the local investor “immunity” – meaning from external influences – especially since the sectors related to the local economy are in a very excellent condition, such as the telecommunications, retail and banking sectors to some extent, and there has not yet been an increase in the benefits that are reflected. on its profitability.
He explained that asset managers are currently focusing on sectors that have a greater connection to the local economy and benefit from the strategy of giant projects that are currently being implemented in the Kingdom, whether in the tourism or hotel sectors.
He pointed to the weakness of the correlation between oil prices and the performance of stocks in the Saudi market, because investors currently have a desire to price what they see in terms of diversifying the sources of income for the state in general.
“In light of the decline in oil prices during the Corona pandemic, the government has fully committed itself to spending on strategic projects aimed at diversifying sources of income. It is too early to see the results today, but there is a desire from institutional investors to price the efforts that are being implemented,” according to Al-Hamid.
He stated that the interaction of “OPEC +” is distinct with the changes that occur in the oil market, whether with demand, expectations of its decline, or economic performance.