SAMA FX reserves rose by $1.8 billion month-on-month to stand at $506 billion in June. FX reserves have risen by $10 billion during the year so far, and we expect them to continue rising to reach $536 billion by the end of the year.
Real Economy
June data showed mixed economic activity. Whilst POS transactions were up 6.8 percent year-on-year, ATM transactions were down 4.4 percent, reflecting slower activity due to Eid al-Fitr holidays, with the previous sizable yearly declines being observed in July and September 2017, also during Eid holidays.
Government Finance
The net monthly change to government accounts with SAMA decreased by SR15 billion month-on-month in June, due wholly to a decrease of SR16 billion from government current deposits during the month.
Bank Credit
Total bank claims rose by 5.4 percent in June, year-on-year. Credit to the private sector continued to rise for the third consecutive month, up by 0.6 percent year-on-year.
Inflation
Prices rose by 2.1 percent year-on-year in June, and inched slightly by 0.1 percent month-on-month. ‘Housing and utilities’ fell by 1.4 percent, year-on-year, affected by the lower prices in ‘rentals for housing’.
Industrial Production
The latest data for Q4 2017, released in July, showed a decline in the overall industrial production index by 2 percent quarter-on-quarter, and by 0.3 percent year-on-year.
Oil-Global
Brent oil prices showed no change month-on-month in July. The combination of renewed trade tensions between the US and China and rising oil output from OPEC/non-OPEC and the US has somewhat dampened the rally in Brent prices recently.
Oil-Regional
Saudi crude oil production reached 10.4 mbpd in June. Meanwhile, official data shows Saudi crude oil exports declined by 300 tbpd month-on-month in May, to 7 mbpd.
Exchange Rates
At the time of writing, survey data was predicting the US Federal Reserve (Fed) would not raise interest rates in a meeting in August, with the same survey data suggesting a high probability of a rise by 25 basis points in September.
Stock Market
TASI was flat month-on-month in July, meaning year-to-July gains stand at around 16 percent. Looking ahead, following MSCI’s announcement last month, we expect active investors entering the market prior to actual inclusion in May 2019 to drive TASI performance even higher.
Source: Jadwa Investment
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