Saudi stocks higher as oil prices bounce

04/02/2016 05:40 AST

A late rebound in oil prices helped Saudi Arabia’s stock market close higher on Wednesday while most other Gulf bourses were lower. Real estate shares helped to lift Egypt’s market.

Stocks around the region fell early on after purchasing managers’ surveys gave fresh evidence that economies are slowing. Growth in Saudi Arabia’s non-oil private sector fell to its lowest level in January since the survey began in August 2009, while growth in the United Arab Emirates dropped to a 46-month low, and activity in Egypt shrank for a fourth month.

But Brent crude, which has been closely correlated to the Saudi stock index this year, bounced above $33 a barrel in the afternoon, helping the index close 0.9 percent higher to 5,927 points.

Petrochemical blue-chip Saudi Basic Industries fell as much as 1.5 percent early on but closed 1.9 percent higher. Saudi Kayan, another petchem seen by analysts as particularly vulnerable to low oil prices and this year’s rise in gas feedstock prices, surged 5.2 percent.

Apart from petrochemicals, most activity focused on second- or third-tier speculative stocks, with Tihama Advertising closing down its 10 percent daily limit and real estate firm Al Andalus rising by that amount.

Other Gulf bourses closed earlier in the day before oil’s rebound and they fared less well. Dubai’s index edged up 0.2 percent as Emaar Properties slid 1.0 percent but builder Drake & Scull rose 2.5 percent.

Courier firm Aramex tumbled 3.4 percent after reporting a 36 percent fall in fourth-quarter net profit to 57.6 million dirhams ($15.7 million); SICO Bahrain had forecast 97.6 million dirhams. Aramex attributed the drop to provisions for employee incentives, and said it would keep expanding through acquisitions.

Abu Dhabi’s index ended 0.8 percent lower as banks which led the market up earlier this week fell back. First Gulf Bank slipped 1.7 percent.

Qatar sank 1.5 percent, dragged down by Industries Qatar. The company fell 3.9 percent; a major petrochemical and steel producer, it is exposed to both oil prices and infrastructure spending in the Gulf, which is slowing because of governments’ austerity policies.

Gulf International Services plunged its 10 percent limit after it swung to a net loss of 20.9 million riyals ($5.6 million) in the fourth quarter; QNB Financial Services had forecast a profit of 278.9 million riyals.

Egypt’s index gained 1.0 percent. Several major real estate shares rose and Emaar Misr, which had climbed 6.7 percent on Tuesday after Prime Holding started coverage of the stock with a “buy” rating and a fair value estimate of 3.94 pounds, rose a further 5.5 percent to 2.32 pounds.

Global Telecom jumped 3.9 percent and GB Auto rose 2.7 percent.

Saudi Gazette