GulfBase GCC Cap Indices
IndexLevelChg%
Large Cap3,925 -0.83
Med Cap3,929 -1.00
Small Cap5,108 -1.14
Micro Cap8,598 -1.08

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QNBK 145 71,382
SABIC 95.35 2,705,663
WARBABANK 265 686,527
EEC 21.57 423,469
GFH 0.72
RIBL 10.49 949,257
ETISALAT 18.05 923,419

Saudi Arabia Earnings Report –Q4FY09

Source: Al Rajhi Bank

Saudi stock market: Q4 2009 results

Positive in the current environment

The Saudi economy was well supported in 2009 by high government spending, especially in construction and non-oil sectors which are a top priority for the government, in order to reduce the country’s dependence on oil. A sharp increase in crude prices and global demand mitigated the threat of earnings slowdown and uncertainty. These factors help explain why the Saudi stock market achieved stronger results in Q4 2009 than might have been expected. A strong recovery in the key petrochemicals sector, the second largest in the market, and a resilient performance in banks, the largest sector overall, provide reassuring indications for a solid market performance in 2010.

The Q4 results support the stance on the market that we put forward in our Saudi equity strategy report of December 2009. The key sectors that we rate as Overweight are Petrochemicals, Cement and Agriculture. While the market background in Telecoms, the third largest sector, is favourable, for company-specific reasons we are only recommending one of the operators (Mobily), and so our stance on the sector overall is Neutral. (See our report “Saudi Telecoms Sector: we prefer jam today” of January 2010 for further details.) We continue to rate Banks, Energy, Industrial, Retail, and Transport as Neutral mainly due to a lack of short-term catalysts. Likewise we continue to rate Building, Hotels, and Real Estate as Underweight given a subdued earnings outlook in difficult economic conditions globally.

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