Saudi petchem stocks extend gains as TASI rises

04/02/2015 06:29 AST

Rallying oil prices and positive corporate news boosted Gulf equity markets on Tuesday, although consumer stocks in Saudi Arabia pulled back after gaining strongly earlier in the week.

Brent crude traded above $56, having gained more than 15 percent since Thursday after data showed the number of US drilling rigs had fallen sharply.

The Tadawul All-Share Index edged up 0.2 percent to 9,227 points as leading petrochemical producer Saudi Basic Industries Corp. climbed 1.1 percent and its affiliate Saudi Kayan Petrochemical Co. jumped 2.4 percent.

"The profitability of the MENA petrochemical producers which benefit from advantageous feedstock pricing will continue to be highly correlated to oil prices," NBK Capital wrote in a report.

The brokerage said Kayan was most sensitive to a potential increase in oil prices: an average price of $75 per barrel would lift its earnings per share by a quarter compared with a $65-per-barrel scenario.

Meanwhile, consumer stocks such as Jarir Marketing and United Electronics, down 2.6 percent and 1.1 percent respectively, pulled back after surging in the previous two sessions.

The sector had risen after the King Salman ordered a big cash handout to Saudi state employees and some large companies also said they would pay out hundreds of millions of dollars in bonuses to mark Salman's accession. Much of the money is expected to be spent on consumer goods.

Dubai's index jumped 2.5 percent to 3,894 points in a broad rally.

Builder Arabtec surged 3.7 percent after announcing it had won contracts worth 375 million dirhams ($102 million) from developer Emaar Properties. Shares in Emaar surged 4.8 percent. Rival developer DAMAC soared its daily 15 percent limit, extending gains after posting a 46 percent surge in 2014 profit on Monday. The stock, which had previously traded only in London and cross-listed in Dubai on Jan. 12, had plunged 36 percent last month on the emirate's bourse.

Bourse operator Dubai Financial Market (DFM) jumped 2.4 percent. Its fourth-quarter net profit increased 31 percent to 138.2 million dirhams, Reuters calculated using company figures. Global Investment House had forecast DFM would make a quarterly profit of 120 million dirhams.

Abu Dhabi's index added 1.4 percent. Dana Gas surged 4.3 percent ahead of a board meeting on Wednesday that will review its financial results.

Qatar's bourse rose 1.3 percent as Gulf International Services surged 5.8 percent after its annual profit more than doubled and it proposed a 5.5 riyals dividend for 2014, up from 1.6 riyals a year earlier. Analysts had forecast the 2014 dividend at 3.35 riyals.

In Egypt, the economic news was not as good; the January PMI showed the non-oil private sector shrank for the first time since last July as both output and new orders fell slightly.

But Egypt's bourse rose 1.3 percent on Tuesday to 9,954 points, a fresh 6-1/2-year high, ahead of earnings reports which companies will begin publishing next week.

Lower oil prices have eased the pressure on the country's fiscal and trade deficits, allowing the central bank to begin a gradual depreciation of the pound which may eliminate the black market and improve the economy's competitiveness.

Reuters