Venezuela Fallout? After worst year since 2015, Saudi equities end at lowest since October 2023

Equity markets in Saudi Arabia, one of the biggest oil producers globally, fell the most in nearly nine months on Sunday, January 4, as investors grappled with the fallout of the rising geopolitical tensions, not just in Venezuela, but also closer to home, in Iran and Yemen.

The Tadawul All Share Index, the benchmark, fell 1.8% on Sunday, the most since US President Donald Trump's tariff tantrum last year. All sectoral indices also ended lower. The index closed at the lowest level since October 2023.

On the flip side, markets across Saudi's neighbours, Qatar, Oman and Bahrain ended with modest gains.

Saudi called on Yemen's southern faction to come to the negotiating table in Riyadh amidst continuous clashes between forces backed by the kingdom, and the rival separatists backed by the United Arab Emirates. Elsewhere, there are already ongoing protests in Iran against the regime, which the Supreme Leader blamed external forces for inciting.

“The current weakness in the Saudi market reflects the regional geopolitical issues, even though there’s no indication of confrontation or escalation at this time, especially related to Yemen,” said Junaid Ansari, head of research and strategy at Kamco Investment Co. “The situation in Iran is also affecting sentiment and adding to the geopolitical risk premium for the region.”

Any impact of any potential disruption in the oil markets will only be felt from Monday, when oil markets resume trading after the weekend holiday.

2025 turned out to be the worst year for Saudi equities since 2015 owing to a whole host of factors, with the biggest being subdued oil prices, which constrained public spending and company earnings as well.

Analysts remain divided for the new year, as some believe that the potential change in foreign investment limits could bring some healthy returns, while some believe that the markets will continue to lack momentum.