The Saudi Arabia stock market index remains stable at record-breaking levels after 15 years.

• Despite a 10-day positive streak ending on Sunday, Saudi Arabia's benchmark index remains at 15-year highs.
• The economy in Saudi Arabia is performing well, with strong corporate profits, successful IPOs, a thriving real estate market, and high oil prices, resulting in a positive outlook among investors, according to Tarek Fadlallah, CEO of Nomura Asset Management, Middle East.
• According to the U.S. Energy Information Administration, the kingdom is the world's second largest producer of oil.

Despite breaking a 10-day winning streak on Sunday, Saudi Arabia's benchmark index remains at 15-year highs.

On Sunday, the Tadawul All Share Index dropped 1.23%, and on Monday it fell 0.76% to reach a midday London time value of 12,047.04 Saudi riyals. Despite this, the index has increased by approximately 7% since the beginning of the year.

The economy in Saudi Arabia is performing well, with strong corporate profits, successful IPOs, a thriving real estate market, and high oil prices, resulting in a positive outlook among investors, according to Tarek Fadlallah, CEO of Nomura Asset Management, Middle East.

As the global economy reopened and energy prices soared, the kingdom, the world's second-largest oil producer, reported a net income of $30.4 billion for the third quarter of 2021, its oil giant Aramco.

Fadlallah stated to CNBC that although the Saudi economy is undergoing diversification, the significance of oil, which contributes roughly three-quarters of exports, cannot be overlooked.

Al Rajhi Capital's research head, Mazen al-Sudairi, concurred, stating that oil is the primary catalyst for Saudi Arabia's stock market. He emphasized that several crucial industries in the kingdom are dependent on oil, both directly and indirectly.

In the past year, oil prices have increased by over 60% due to a surge in demand, reaching a seven-year high last week following an attack on Abu Dhabi that was claimed by Yemen's Houthi militants.

Ehsan Khoman, head of emerging markets research EMEA at MUFG Bank, stated that the current backdrop continues to support share price performance.

Companies in the petrochemical industry could benefit greatly from low costs and high operating efficiencies, according to him.

Tailwinds for markets

The profitability of banks in the Saudi market is expected to improve due to rising interest rates, according to market watchers.

According to Khoman, higher oil prices and interest rates positively impact Gulf Cooperation Council banks by increasing credit growth, enhancing liquidity, and improving asset quality, while also reducing the cost of funding.

Consumer retail firms in the Gulf will benefit from increased discretionary spending due to the positive correlation between oil prices and consumer confidence.

Some investors are underweight Saudi stocks, and others could buy more aggressively, potentially driving the stock market higher, according to Nomura's Fadlallah.

He believes that the Tadawul All Shares Index will not set new records in the near future.

Despite the TASI surpassing its 15-year trading range, the all-time highs remain distant and unlikely to be attained in the near future, according to him.

The index hit 20,624.84 in February 2006, according to data from Refinitiv.

IPO ‘bonanza’

Fadi Arbid, chief investment officer at Amwal Capital Partners, stated that the competition for initial public offerings in the Middle East is a positive development in the region's markets.

Last week, he informed CNBC's "Capital Connection" that there is a healthy bonanza in some markets, despite being thin in others.

Although Saudi Arabia has an advantage over other states due to its higher market capitalizations, average trade volumes, and number of IPOs, "others are also catching up," he stated.