Saudi Arabia lifts mood in regional markets

24/11/2016 05:42 AST

Saudi Arabia’s index firmed on Wednesday as blue chips resumed their climb and the positive mood flowed into other Gulf bourses, carrying them higher.

Egypt’s market edged up, holding near an 8-year peak as foreign funds remained aggressive buyers. Riyadh’s index bounced 3.0 per cent to 6,796 points, closing 93 points over technical resistance at the July peak of 6,703 points.

Turnover was almost double that of Tuesday. Some blue chips continued to attract funds, with the top telecommunication operator Saudi Telecom Co (STC) jumping 4.6 per cent.

Riyad Capital said in note that STC has maintained its dividend policy of 1 riyal per quarter and they believe it has the ability to increase dividend payout because of its sound financials and strong cash position. Some of the large-cap petrochemical producers also ended on a strong footing, despite now trading at a slight premium to the their estimated fair values.

Bellwether Saudi Basic Industries climbed 4.1 per cent to 90 riyals; the average fair value according to Thomson Reuters data is 88.68 riyals.

Banking shares, which succumbed to profit taking in recent days, firmed. All of the 12 listed lenders gained with National Commercial Bank closing 4.7 per cent higher. Many analysts believe that since there has been a shift in both the domestic and global macro environment, investors are betting that banks will be able to recover some of their profitability, with some banks now in a position to potentially increase their earnings next year.

Dubai’s main index added 1.8 per cent, with the momentum building in the final hour of trade. Small and mid-sized shares, usually traded by local investors, were chief gainers with builder Arabtec surging by its 15 per cent daily limit in heavy trade.

Dubai Financial Market, the only listed exchange in the Gulf, jumped 6.2 per cent. Abu Dhabi’s index rose 1.0 per cent as Dana Gas added 1.8 per cent. Lenders that are set to be merged at the start of 2017 gained with First Gulf Bank adding 2.2 per cent and National Bank of Abu Dhabi closing 1.6 per cent higher.

The Gulf Today