Saudi shares lead Gulf up as foreign investor restrictions eased

05/09/2016 07:40 AST

Saudi Arabia led Gulf stocks higher yesterday as Riyadh eased restrictions on foreign investment in its securities markets, while most other bourses in the region were buoyed by strength in oil prices and global equities at the end of last week.

As previously announced, the Saudi Capital Market Authority lowered minimum qualifications for foreign institutional investors in its markets and raised ceilings on foreign ownership in stocks.

The reforms are not expected to cause a sudden surge of new foreign money into the kingdom; actual foreign ownership of stocks is well below the previous ceilings. Many investors remain deterred by less-than-attractive valuations and a sharp economic slowdown caused by low oil prices.

Nevertheless, the reforms are expected to help stocks in the long term. The main index climbed 1.3% yesterday in a broad-based rise, with petrochemical investment holding company Alujain rising 3.4%; before the reforms, foreign institutions directly owned over 4% of the company, a relatively higher percentage.

Emaar the Economic City (EEC) rose 3.5% after Reuters quoted a source familiar with the matter as saying Saudi Arabia’s top sovereign fund, the Public Investment Fund, was in talks to invest in King Abdullah Economic City, the huge project being developed by EEC. Insurer Wataniya, which had been languishing at a five-year low, jumped 6.9% in its heaviest trade in four years.

In Dubai, the index added 0.7% with GFH Financial, the most heavily traded stock, surging 4.6%.

Abu Dhabi edged down 0.2% because of weakness in banks, with First Gulf Bank losing 1.3%. Most of the 10 most heavily traded stocks barely moved.

In Egypt, the index added 1.3% on the back of a 2.2% gain by Global Telecom Holding. Egypt’s top cigarette maker Eastern Company rocketed 7% after its board approved a capital hike of 750mn Egyptian pounds ($84mn) through the distribution of one free share per existing original share.

Elsewhere in the Gulf, Kuwait’s index fell 0.3% to 5,395 points; Oman’s index rose 0.2% to 5,728 points; Bahrain’s index dropped 0.2% to 1,141 points.

Gulf Times