In most cases, this volatility is caused by unavoidable risks. It is therefore not surprising that any investor would want to anticipate the amount of unavoidable risks they are exposed to. As such, the Saudi Arabian stock market has been of great interest to economic researchers. Factors that affect volatility will also be referred to as market influencers in this paper. Studying market influencers will promote the market as a viable opportunity to external investors and globalize the securities for better market performance. This means market stability (Ibp Usa & USA International Business Publications, 2005).
Despite being exposed to major turbulent and market-moving events, the Saudi Arabian stock market has shown tremendous improvements. A reflection of this can be seen in the share price movements and the flourishing economy. The peak of this performance was in February 2006, but this was affected by the severe global and economic downturn in the late 2008. Another factor that fuelled this backdrop was the unprecedented unrest in the Middle East during almost the same period. The market has however shown improvements in the past several years to become one of the best in the region.
In an attempt to study the market stability and progression of the Saudi Arabian stock market, several researches were done. While some research has focused on the quantitative and qualitative data, others have focused on external influences and comparisons made against stock markets in a bid to explain the performance of the Saudi Arabian stock market. Stock market indexes of specific companies in that country are used for purposes of this study. Consequential studies have unearthed that the Saudi Arabian stock market has distinct and clear cut differences with other markets. Firstly, the shares are traded through commercial banks. Secondly is the absence of bourse makers and thirdly is the liquid characteristic of the market (Mohamed, 2010).