Saudi rally continues, upgrade fails to boost Egypt

08/04/2015 11:47 AST

Saudi Arabia's stock market continued rebounding early on Wednesday because of firmer oil prices, but an upgrade of Egypt's debt by rating agency Moody's failed to boost that bourse.

Brent crude has risen sharply in the past two days and although it has pulled back slightly on Wednesday morning, it is still above $58 a barrel, about $1 above its levels when Gulf stock markets were open on Tuesday.

The Saudi stock index climbed 0.6 percent in the opening minutes of trade. Real estate stocks, which began recovering this week from a sell-off caused by a plan to tax undeveloped land, rose further; Dar Al Arkan, the most heavily traded stock, added 0.9 percent.

There were also signs of broad buying-back of petrochemical firms beaten down by weak oil prices. Saudi Basic Industries , the biggest petrochemical prodcuer, gained 2.2 percent, while PetroRabigh climbed 1.5 percent.

Jarir Marketing, Saudi Arabia's second-largest retailer by market value, rose 2.6 percent after posting a 22.7 percent rise in first-quarter net profit to 247 million riyals ($65.9 million); analysts polled by Reuters had forecast on average a profit of 231 million riyals.

In Egypt, however, heavy profit-taking resumed after the index rebounded 2.5 percent on Tuesday. It fell back 1.4 percent early on Wednesday with Orascom Telecom, the most heavily traded stock, down 1.9 percent.

Moody's upgraded Egypt to B3 with a stable outlook, citing an improving economy and economic reforms, but this was not a surprise - the international bond market had already factored it in.

The prospect of sharply increased new share supply as the Egyptian market recovers may be weighing on prices. Three local energy-related firms with combined capital of more than 8.5 billion Egyptian pounds ($1.11 billion) intend to list on the exchange, the bourse said on Tuesday. It attracted six new companies in the first quarter, representing combined capital of around 4 billion pounds.

Reuters