Saudi stocks gain on reforms

09/06/2016 02:27 AST

Saudi Arabia’s stock index rose 1.1 per cent on Wednesday as investors accumulated shares in companies set to benefit from economic reform plans, while oil hitting fresh 2016 highs buoyed investor mood across the region.

Saudi Arabia’s Dar Al Arkan Real Estate Development Co jumped 9.2 per cent to 5.95 riyals, surging by its daily limit for a second straight day. After the market close on Tuesday, the developer said it was in talks with the government to provide housing under the kingdom’s economic reform plan. It did not give further details.

Emaar Economic City also said it was in talks with the housing ministry to build homes for Saudi citizens, and its shares surged 8.6 per cent.

The Saudi government published a five-year National Transformation Plan (NTP) on Monday, part of a wider set of reforms launched in April as “Vision 2030”.

The plan, which sets targets for government agencies and also includes spending on new initiatives in healthcare, mining and renewable energy, will cost an estimated 270 billion riyals ($72 billion) to implement.

Finance Minister Ibrahim Alassaf said on Tuesday it will partly be paid for by making public sector efficiency savings and cutting spending on existing projects.

It also targets increasing the percentage of Saudi families that own homes to 52 per cent by 2020 from the current 47 per cent and cutting the waiting period to obtain housing financing to five years by 2020 from 15 years at present.

Also benefiting from the planned economic reforms, Al Tayyar Travel Group jumped 3.1 per cent to 39.70 riyals. The company, which offers religious tourism services in the kingdom, is set to benefit from a push to expand the role of tourism and hospitality sector in the economy, as outlined in the plan.

Petrochemical shares were also strong, with the sub-index gaining 1.4 per cent as Brent crude prices hit fresh 2016 highs.

Dubai’s Shuaa Capital jumped 5.7 per cent after it confirmed in a bourse statement on Wednesday that Abu Dhabi Financial Group had reached an agreement to buy the 48.36 per cent stake of the investment bank held by Dubai Banking Group.

The transaction, for which no value was disclosed, is subject to regulatory approvals, it said. Dubai’s main index rose 0.8 per cent as winners outnumbered losers 18-to-four. Blue chips Emaar Properties and DAMAC Properties closed up 1.3 and 3 per cent respectively. Real estate and banking shares buoyed neighbouring Abu Dhabi’s index, which gained 1.4 per cent. First Gulf Bank and Aldar Properties each rose more than 2 per cent.

In Cairo, the main index added 0.8 per cent to 7,780 points, it highest close since April 27. The Egyptian pound strengthened on the black market on Tuesday, a sign that worries over further devaluation have abated, for now, encouraging investors to accumulate Egyptian shares.

Social overhaul

Saudi Arabia’s sweeping plans to overhaul its economy in coming years are matched by proposals for social transformation.

While proposals in the “Vision 2030” reforms to reduce Riyadh’s dependence on oil revenue and boost the private sector have drawn most attention, some of the most consequential changes envisaged for Saudi Arabia are to its society.

“The Vision 2030 or the other programmes are intended to transform not only the economy. The intention also is to transform the society and to address the needs of the younger generation and the aspirations that they look for,” Information Minister Adel Al Toraifi said on Tuesday.

The Gulf Today