00:00 Dr. Abdullah Baashan from Riyadh joins us, the head of the board of Team One Consulting.
00:06 Welcome, doctor. We have a lot of files to talk about.
00:10 First, what is your opinion on the continuation of the revisions to the Saudi market indicator?
00:14 We are talking about six revisions.
00:17 We broke the lowest level we saw in August, on August 8, which was at 11,244 points.
00:26 Where do you think the indicator will go now?
00:31 Hello, viewers of CNBC.
00:35 The market and the indicator are the opposite of the economy,
00:43 especially the local economy, and I don't know if there are any changes.
00:49 Last week, we were talking on CNBC's screen and the indicator was at 11,500 points.
00:59 We warned that if we break the 11,400 point, the indicator will go down.
01:05 This is what happened.
01:07 What happened is that people now want to sell,
01:12 as a result of the existence of other opportunities, especially in the process of selling other assets other than the financial markets and the stock market.
01:22 Isn't it strange to see a brand worth more than $90 per barrel,
01:29 and yet the market continues to decline?
01:32 Is the current price of a brand worth more than $90 basically an advertisement for the Saudi market?
01:39 It is basically an advertisement for the economy as a whole.
01:43 The first thing is the increase in the interest rate.
01:46 It has increased by about 6% at the current time.
01:51 In addition to the inflation process, let's talk about 3% and 4% more.
01:56 So, about 10% has become an advertisement for this 90.
02:01 So, you are dealing now with the limits of 80 to 75 dollars.
02:06 This is the main factor.
02:09 The other factor, which is important in the price of oil, is instability.
02:13 The instability of the Saudi government has now announced the process of decreasing the inflation rate until the end of December.
02:20 This has made the financial and economic situation look a bit worrisome.
02:28 Especially since the interest rate is high, and inflation is still high.
02:36 Then, your cash flows are now different from what is expected in the general balance sheet.
02:46 As for the financial stocks, why are we seeing this wave of withdrawals for banks?
02:52 Today, we see the Rashi, the Riyadh Bank, the French Saudi, all the financial stocks are withdrawing at a high rate.
02:59 Why do you think?
03:02 In fact, I think that the same process, the process of pressure on the banks and the process of pressure on interest rates,
03:10 has also made the banking sector unstable.
03:14 The other reason we add to the banking sector is the process of whether the lender will now be able to pay the amount of loyalty
03:23 when these debts or commitments are fulfilled.
03:27 This is another factor, a risk factor.
03:29 So, the so-called risk sensitivity as a result of the factors mentioned above will increase.
03:36 The first factor that will affect the situation is the banking sector, of course,
03:41 although it has financial liquidity, but it has financial liquidity and not cash.
03:47 Let's take it simply and put it in the minds of the viewers.
03:53 The banks are like any theater that produces goods, but these goods cannot be traded in the market,
03:59 so they are stored in warehouses.
04:02 Okay, usually when we see this wave of withdrawals, we start to ask when we will see the policy of buying the dips or buying the dips.
04:10 Doctor, in your opinion, at what level, in relation to the Saudi market indicator,
04:14 could the strategy of buying the dips or buying the dips be the strategy that the investor should start to think about?
04:21 I think this policy starts when we find that the real indicator has really dropped to less than 10% or 510%.
04:31 Why? Because the first thing you will find is the profit returns that have exceeded and reached some companies,
04:38 especially companies that do not have power, brand, or market, up to 80% and 70%.
04:46 So here the process starts, for example, one of the companies, I think, was in the growth market and now it has moved to the main market and reached 1500%.
04:56 Today we are talking about 500%. Is 500% the same?
05:00 If we take it as an example, and I do not mean a specific company, then the repeat is still about 80%,
05:06 so the dip cannot be included unless the repeat is less than 9%.
05:11 And maybe the best thing that happened to the Saudi telecommunications company, STC.
05:16 I want to ask you about this. I want to ask you about this, Dr. Abdullah.
05:20 But let's remember the audience first. Today, STC shares recorded a rise of more than 1%.
05:26 Since the beginning of this year, STC shares have risen by about 7%.
05:30 And if you look at the trailing PE, or historical profit return, it is cheaper than the market profit return by 15 times for STC.
05:37 You are taking over Telefonica, and it is clear that you are benefiting from the fact that STC has a strong financial portfolio,
05:43 and a very high liquidity, and it is expanding to other markets because we have a saturation in the phone communications sector in Saudi Arabia.
05:51 How do you see this deal, and will this deal increase the attractiveness of STC shares?
05:57 This is a good question. STC entered at the right time.
06:03 It bought Debit at a lower price, at a discount, at a nine-fold increase.
06:09 STC itself repeated it at 13 or 15, as you mentioned.
06:14 So 14 or 15 compared to the telecommunications sector, only with TIC,
06:19 it has also become a company that is almost tempting to buy.
06:25 But the other and more important issue is, is this liquidity enough in the market?
06:30 Here we are not talking about the amount of liquidity, the number of billions that exist,
06:34 but we are talking about the amount of liquidity, the liquidity level at the end of the day between sale and purchase.
06:41 If the sale is high, then the liquidity is not enough.
06:45 It went to other fields.
06:48 But if the purchase is the most, or the balance in the purchase, then the money went to the market.
06:55 If you took the last 20 or 30 sessions, you will find that the money is coming out of the Saudi markets and other markets.
07:04 I see the STC budget, we are talking about very strong liquidity,
07:11 we are talking about almost 28.9 billion Riyals, according to the figures of June 2023.
07:19 I am only seeing how much cash and short-term investments or liquidity are there.
07:25 This is a measurable liquidity for the Saudi telecommunications company.
07:29 This is what is preparing it to acquire 9.9% of Telefonica.
07:33 During this period, are there sectors that you see as the best choice for the investor?
07:42 The investor who wants to be in the Saudi stocks, but does not want to be greatly affected by the fluctuations in oil prices.
07:49 I think the investors have the options now, which are the so-called stocks of companies that rely on the local economy.
07:59 But there is a problem in the process of setting up the Saudi stock market, which is the TIC.
08:05 It has been exaggerated in the price of the stocks, whether it was at the time of the proposal or in the date of the proposal or after that.
08:14 As we gave an example, there are companies that have become huge.
08:17 Even now, when the system of referral to the process of sharing of stocks is less than Riyals, you also have another problem.
08:28 When you share 400 or 500 Riyals and you share it to Riyals, it is still high.
08:34 Even the process of sharing of the Riyals will not be enough.
08:39 It needs more lasers than sharing of the Riyals.
08:41 Thank you very much, Dr. Abdullah Baachan, Chairman of the Board of Team One for Consultations.
08:47 Thank you, Ma'isha.
