Saudi stocks barely moved in July, but trading nearly halved

TASI closed July down 1.95% at 10,590 points, a decline mild enough to pass for a quiet month. It wasn’t one. Strikes on Saudi refineries, a Houthi naval blockade, and Saudi jets joining US airstrikes on Iran-backed militias in Iraq all fell within the month.

What gave way was the trading behind it. Turnover came in at SAR 86.1 bn, down roughly 20% from the same month last year, while share volume nearly halved to 4.55 bn from 8.6 bn a year earlier, the Saudi Exchange said in its monthly report (pdf). Market cap ended at SAR 9.45 tn across 269 traded names.

The vanished volume is the month’s real signal, CG Invest head of financial market analysis Aseel Al Aranki tells EnterpriseAM. “Price is a marginal-trade number,” she says. When volume falls this far while price barely moves, it usually means the order book thinned rather than that buyers and sellers found a real equilibrium, she argues.

It's a placeholder price rather than the market’s verdict on the news: That thinness is also why the market could take the news without cratering, she adds, since there wasn’t enough two-sided flow to force price discovery.

The escalation that should have moved the market came in its final week. That left three or four trading sessions between the worst of the news and where the market closed, Al Aranki says. A market trading on a fraction of its usual volume can’t reprice a live conflict in a handful of sessions.

The vulnerability sits at Yanbu. With Hormuz still choked, the Red Sea terminal had become effectively the kingdom’s only working export corridor, carrying 92% of June’s seaborne crude exports and 78% of July’s. The 25 July strikes hit the refinery complex, not the export terminal itself. “If that terminal itself had been the target instead of the refinery complex, you’d expect a different index reaction entirely,” she says.

Who stepped back explains the missing volume. Aranki reads it as sequential. Retail, the segment most sensitive to war-risk headlines, stops showing up first. Domestic institutions, the pensions, insurers and asset managers, de-risk more deliberately, trimming and raising capital in size, which shows up in turnover rather than price. Qualified foreign investors “stay away” the longest until there’s clarity.

Foreign investors had the least reason to stay. Saudi Arabia opened barrier-free direct access to all categories of foreign investors in February, leaving a foreign base still young, thin, and with little home-bias reason to sit through a regional war. A Gulf-war headline is exactly the event that triggers a risk-committee review at a foreign fund and pauses new allocation, Al Aranki notes, while domestic institutions have nowhere else to redeploy Saudi-mandated capital.

Open access was meant to deepen this market. It hasn’t yet. Saudi Tadawul Group’s first-half results show daily average traded value down 9.11% against 1H 2025. “The CMA delivered the access; the market hasn’t yet delivered the liquidity,” Aranki says. She stops short of calling the reform a failure, since foreign capital arrives in waves once custody, settlement, and index mechanics catch up, but a war in the same window is close to the worst environment to test the thesis.

The breakdown

Beneath the headline, the individual moves were narrow and concentrated. Energy and materials led the risers, but the strength didn’t extend to the sector’s largest names. Petro Rabigh climbed 21.69% to SAR 14.87, up 117.40% for the year, yet Sabic fell 3.78%, and Aramco added just 1.38%. Tabuk Agricultural led all gainers at 47.50%, and Knowledge Economic City rose 23.05%. The fallers were scattered small-caps rather than a sector, led by Naseej (-31.71%), Saudi Fisheries (-23.29%), and Nice One (-21.37%).

The index’s heaviest names accounted for much of the downside. Al Rajhi fell 5.08% to SAR 62.55, and Alinma dropped 4.42%, pulling the benchmark down even as most other lenders rose, with Saudi Awwal Bank, Arab National Bank, and Bank Aljazira each up more than 4.5%.

What to watch

The usual defensives look less safe than the textbook says. Telecom, healthcare, and food retail trade on demographic, SAR-denominated demand, but two things complicate the hiding place this cycle, Aranki says. A shut-in Jazan refinery and a squeezed export corridor are a fiscal story as much as an energy one, and Saudi consumer names are unusually tied to public wages, subsidies, and Vision 2030 project flow, so “not exposed to crude” is not “not exposed to the state’s balance sheet.” And with turnover down across the board, even a sound defensive can gap on a thin book.

Keep an eye out for August: “The real test is whether August turnover returns and where price goes on real volume once people actually have to trade around a damaged Jazan refinery and a live Iraq front,” Aranki says.