The market, as measured by the Rabee Securities RSISUSD Index, increased by +2.5% in April, bringing the YTD decline to -11.8%. Average daily turnover, excluding block transactions, declined -32% from the prior month, and at 60% of the average turnover for the last 12 months, is the second lowest for the period. Foreign selling, the cause of the last few weeks’ declines, seems to have exhausted itself (chart below) and in the process prices lifted higher.
The early signs of the return of the liquidity to the real economy, reported here over the last few months, are becoming more convincing as the healing effects of increasing oil revenues are continuing to filter down into the broader economy. The continued recovery in broad money, i.e. M2 as a proxy for economic activity, is adding to this conviction due to its sensitivity to oil revenues (chart below)- given the central role of government’s spending on non-oil economic activity.