Plan for solar plants: SEC jumps its 10% daily limit

15/06/2016 00:52 AST

Gulf stock markets rose on Tuesday but many investors stood on the sidelines before MSCI’s decision later in the day on whether it would consider Saudi Arabia for inclusion in its emerging markets index.

International index compiler MSCI is to announce after the close on Tuesday whether it will put Saudi Arabia on review for possible inclusion as early as mid-2017.

Inclusion would bring billions of dollars of passive foreign funds into the market, but fund managers are split on whether Saudi Arabia is likely to be put on review this year. Some managers believe the possibility is strong because of an easing of foreign ownership restrictions and reforms to the trading environment announced in early May by the regulatory body, but others think inclusion will not come before mid-2018.

The Saudi Tadawul All-Share Index climbed 0.6 percent on Tuesday as Saudi Electricity Co. (SEC) jumped its 10 percent daily limit to SR20.05, its highest close since the end of May 2015.

SEC said earlier that it was inviting expressions of interest from companies to build two solar power plants; the firms would invest in the plants and sell electricity to SEC in deals that could become models for future infrastructure projects under Saudi Arabia’s economic reform plan. But property developer Dar Al-Arkan dropped 3.2 percent as investors booked profits on gains that were triggered by expectations it would benefit from housing construction plans in Saudi Arabia’s economic reform plan, announced last week. Emaar the Economic City, another potential beneficiary, fell back 2.0 percent.

In Dubai, the main index added 0.2 percent to 3,330 points as Dubai Islamic Bank climbed 2.4 percent and Emaar Properties recovered from early losses to close up 0.3 percent. “Dubai’s stock market witnessed selective buying, heading higher to retest the 3,380 resistance level,” said a note by Abu Dhabi’s NBAD Securities. The benchmark tested that barrier late last week but failed to break above it.

At current low trading volumes, a breakout above the resistance remains unlikely in the near term, added the note. The two largest listed stocks on Abu Dhabi’s exchange, Etisalat and First Gulf Bank, helped pull the index up 0.5 percent.

Etisalat, which rose 0.8 percent, and First Gulf, which added 0.4 percent, are constituents of the MSCI emerging market index, may see a small outflow of funds if MSCI decides on Tuesday to include China A-shares in the index, which would dilute the weightings of Gulf constituents.

In Doha, some members of MSCI’s benchmark also gained. Developer Ezdan Holding jumped 2.3 percent and lender Masraf Al Rayan rose 1.0 percent.

Cairo’s main index dropped 1.0 percent as Orascom Telecom retreated a further 3.1 percent. Shares in the conglomerate have now fallen 11.4 percent since Sunday after a plan by its unit Beltone to acquire CI Capital from Commercial International Bank (CIB) was called off because it failed to win regulatory approval. CIB, a constituent of the MSCI emerging market index, fell 1.5 percent on Tuesday.

Arab News