Houthi attacks deepen Saudi stock market sell-off

• All-Share Index hits 43-month low
• Aramco dips 2% but up year-on-year
• Investor concern at logistics upheaval

Riyadh’s stock exchange fell to a 43-month low on Wednesday as Houthi attacks from Yemen disrupt air travel and supply chains in Saudi Arabia.

The All-Share Index, which tracks the main market, closed at 10,139 points, its lowest since March 16, 2023, when it ended at 9,977.

The latest slump followed a series of missile and drone attacks on Saudi Arabia that have forced the kingdom to close the main airport in Riyadh, the capital. Numerous airlines have cancelled flights across the country, forcing organisers to call off events and travellers to postpone business trips.

“We’re seeing selling across the board in Saudi,” said Shahrukh Saleem, a portfolio analyst at Dubai-based asset manager Mashreq Capital, “and it’s largely geopolitical. Even the names foreign investors favoured until recently are now under pressure.”

Shares in state-owned oil giant Aramco, by far the largest company listed on the exchange, fell 2 percent following an attack on its headquarters in Dhahran on Tuesday evening.

However, its share price remains up more than 7 percent year on year. The company has stayed profitable through the US war with Iran, according to public disclosures, an outcome it attributes to its ability to export oil via the Red Sea.

Saudi Arabia’s oil revenues have increased since the Iran conflict began earlier this year, while domestic inflation has remained unaffected by shipping disruptions.

“Earlier in the conflict, Saudi was relatively insulated,” Saleem said. “Its export routes stayed open, and that worked in its favour. Now the kingdom itself is under attack, and the market is repricing that risk higher.”

Flight disruptions extended into Wednesday. Riyadh airport remained closed while almost a third of flights at Dammam and Jeddah were cancelled, according to flight data on Flightradar24.

Further reading:

• War weighs on investors’ outlook for regional stocks
• Aramco profits surge in face of mounting risks to exports
• The multimillion-dollar cost of the Hormuz-Red Sea closure

Houthi threats to shipping through the Bab al-Mandab waterway are deterring vessels, forcing Saudi oil exports and vital imports to take longer, more expensive routes and pushing up logistics costs.

Saudi Arabia has a number of large projects on the horizon, including Expo Riyadh 2030 and the 2034 football World Cup. Recruiters and investors have said they are optimistic that hiring and investment will pick up again before the end of the decade.

“The fundamentals are there,” Saleem said. “It’s the geopolitical overhang holding things back. Once that clears, interest should return.”