Saudi Arabian stocks lead Gulf gains

29/08/2016 05:17 AST

Saudi Arabian stocks led gains across Gulf equities as an advance in the price of oil helped offset investor caution over the timing of US interest-rate increases.

Saudi Arabia’s Tadawul All Share Index rose 1.6 per cent, its first increase in six days and biggest climb since April 25. Qatar’s QE Index added 0.6 per cent. The Bloomberg GCC 200 Index, a gauge of the largest and most-liquid shares in the six-nation Gulf Cooperation Council, gained 0.6 per cent, ending a seven-day retreat.

Brent crude, the region’s main source of revenue, rallied at the end of last week partly on speculation that informal discussions among members of the Organization of Petroleum Exporting Countries will lead to action to stabilise the market. That’s helping traders in the GCC overcome anxiety about an increase in US borrowing costs that Federal Reserve Vice Chairman Stanley Fischer said could come in September, potentially trimming appetite for emerging-market assets.

“The oil situation will top rate-hike concerns for the region, giving some room for a rebound in stocks in the short term, mostly in Saudi Arabia,” said Saleem Khokhar, the Abu Dhabi-based head of fund management and equities at the asset- management group of National Bank of Abu Dhabi, the United Arab Emirates’ second-biggest bank.”Any indication that an output freeze is underway will be important.

We’ll also see some major players returning from holidays, and we expect a normalisation of volume due to that.” Saudi stocks are recovering from their cheapest level compared with emerging-market peers in about five years, according to data compiled by Bloomberg.

Of the 174 shares making up the benchmark index, 163 gained. Al Rajhi Bank contributed most to the advance with a 2 per cent increase, followed by utility Saudi Electricity and cement producer Saudi Cement.

Trading volume on the Tadawul was about 44 per cent below the daily average over the past six months, the data show. The kingdom intends to sell at least $10 billion in bonds as early as in October, people with knowledge of the matter said last week. Meanwhile, the initial public offering of Saudi Aramco remains on track, according to Saudi Arabia’s Energy Minister.

The Gulf Today