Banks boost Tadawul for 8th straight day

31/10/2016 05:20 AST

Strong banking shares boosted Saudi Arabia’s stock market for an eighth straight day on Sunday but the rest of the region was sluggish in response to soft oil prices and global bourses, while Qatari equities fell sharply.

Saudi banks have been rallying since Riyadh’s mammoth international bond sale this month partly eased worries about the government’s access to finance and its ability to cope with an era of low oil prices.

The Saudi stock index climbed 0.7 percent in active trade on Sunday, bringing its gains since the rally began to 9.5 percent — although it is still 10.8 percent below its July peak. The banking sector index jumped 2.1 percent as the biggest lender, National Commercial Bank, was by far the sector’s top gainer, surging 7.8 percent in its heaviest trade since July 2015.

Late on Thursday, the central bank announced fresh steps to ease a liquidity crunch caused by low oil prices, lowering the maximum volume for its Treasury bill issues and introducing a new 90-day repurchase instrument to inject funds into the money market when needed.

Those steps in themselves look unlikely to make much difference to banks. But investors took them as a sign that authorities are determined to improve liquidity, and may therefore also disburse more stalled government payments to construction firms and other creditors of the state. That should help bank loan quality.

Saudi petrochemical shares underperformed on Sunday as money flowed into banks and after Brent crude oil futures fell back 1.5 percent on Friday to below $50 a barrel. Saudi Basic Industries Corp. dropped 0.9 percent.

Elsewhere in the Gulf, the mood was not as positive. Qatar’s index dropped 2.2 percent as several heavily traded stocks fell sharply.

Drilling rig provider Gulf International Services, which reported weak third-quarter earnings late last week, sank 8.1 percent while Qatari Investors Group plunged by its 10 percent daily limit.

Commercial Bank of Qatar fell 3.9 percent after saying it planned to convene shareholders to seek approval to increase its capital through a rights issue. It did not give details. Widam Food rose 0.5 percent, however, after reporting a 31 percent jump in third-quarter net profit.

Dubai’s stock index edged up 0.1 percent as GFH Financial, the most heavily traded stock, surged 5.1 percent and builder Arabtec, the second most active, added 3.9 percent. Most stocks barely moved.

Egypt’s index edged up 0.2 percent with most of the 10 most heavily traded stocks barely moving, although Ezz Steel climbed 2.7 percent.

Arab News