Saudi Stock Market Under Vision 2030: The Economic Factors at Play

Abstract

This research provides an in-depth analysis of the relationship between macroeconomic variables and the performance of the Saudi stock market, mainly (TASI) the Tadawul All Share Index within the context of Saudi Vision 2030. Using monthly data covering between January 2017 to December 2023, the study addresses the influence of inflation, interest rate on deposits, oil price, and foreign exchange reserve on the TASI index. Understanding how these macroeconomic factors impact the TASI will be useful for Saudi Arabian policymakers and investors, enabling more informed decisions and reduced risk exposure. The research utilizes the Autoregressive Distributed Lag (ARDL) framework for conducting the analysis. and discovers that the short- and long-term positive relationship between the price of oil and TASI is substantial, highlighting their continued influence on the Saudi stock market despite economic diversification efforts. Other variables like foreign exchange reserves, inflation, and interest rates show no significant long-term nor short impact on TASI. The study highlights the stability of the model parameters and the non existence of heteroskedasticity, autocorrelation, and omitted variables, offering valuable insights for paunderstanding market dynamics and guiding financial decision making in Saudi Arabia.