Riyadh-Mubasher:  The landslide in Saudi Stock Exchange (Tadawul) wiped out almost SAR 500 billion from market capitalisation in August, which will push investors to seek different alternatives, NCB Capital (NCBC) said in a report.

It added that the current muted appetite reflects the weak confidence in the domestic equity market.

However, despite weakening corporate profitability announcements on the back of a slowing business cycle and cheaper commodity and energy prices, stocks are providing lucrative long-term investment opportunities.

The price-to-earnings ratio dropped to the 13-14x range after peaking above 19x a few months ago.

The research firm expects the domestic market to remain volatile and susceptible to external shocks in the short-term as global volatility has intensified lately.

The bourse has been experiencing low activity for the past three months which started during Ramadan.

The seasonal drop in trading continued to pressure the market and gradually dragged the index lower, NCBC said.

Additionally, the persistently low oil prices and increased global risk averseness led to the wide sell-off in the domestic market. The bearish momentum dragged the index to as low as 6’920.96 during August, the lowest level in over two years.

However, the market rebounded on the back of global optimism which led the market to end last month at 7’522.47, a monthly drop of 17.3%, NCBC said.