Saudi stocks ... high price levels compared to the returns

​Saudi stocks rose for the second session, to close at 8720 points, gaining 40 points by 0.46 percent, while the MT30 index, which measures the performance of the leading stocks, increased three points by 0.29 percent. The rise came amid the rise in most sectors and stocks. The performance improved, driven by the rise of small and medium-sized stocks, where the blue-chips performed less. The increase came at a lower rate than the previous session, with a 5 percent rise in liquidity to reach 11 billion riyals, less than what it traded at the weekend at nearly 14 billion riyals. The speculative tendency is still active and the market is awaiting levels of 8765 points and the ability of the market to achieve new levels for this year. The market’s continuation of achieving new levels enhances risk appetite and attracts more liquidity to the market. The market is still at high price levels, compared to the returns, and it requires companies to double their profitability during the next 12 months to keep profitability multiples at acceptable levels, compared to what the market is accustomed to, and amid the high uncertainty about profitability and the performance of companies with the developments of the pandemic, the wave of rising does not seem sustainable. Which makes the risks high, and the possibility of the market being exposed to possible sharp corrective waves.