SAMA: Global stock markets vulnerable to rate hikes

A recent report issued by the Saudi Central Bank (SAMA) revealed that global stock markets hit records, so, there are more points of weakness.

SAMA said in the financial stability report that world stock markets are more vulnerable to rate hike shocks. Investors are keen to get higher yields in a low-rate environment and supported by better economic growth outlook, but this caused strong highs in stock markets globally.

According to the report, sharp pullbacks in asset prices would cause market instability and lower liquidity as what happened in bond markets during 2020.

SAMA added that TASI rose 2592 points to close at 11282 points by the end of 2021, with 29.8% increase compared to 2020.

This came as a result of strong recovery of the Saudi economy last year on easing Covid-19 strict measures.

Moreover, TASI performance was compatible with international markets; in addition, higher oil prices have caused a positive effect on the Saudi market in the second quarter of 2020.