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Saudi Arabia's stock market gained on Wednesday on the back of the blue chips which are expected to be bought when the market opens to direct foreign investment. But rises slowed after Tuesday's leap.
The main Saudi index climbed 1.4 percent to a fresh six-year high of 10,163 points. Petrochemicals giant Saudi Basic Industries (SABIC) added 4.8 percent and Al Rajhi Bank, the largest listed bank, gained 1.1 percent.
The benchmark had jumped 2.8 percent on Tuesday after Saudi authorities said they planned to allow foreign institutional investors to buy local stocks from the first half of 2015.
But the euphoria diminished on Wednesday and trading volume shrank as some investors took a more realistic view of how much money will actually enter the country in the next 18 months. The regulator is expected to allow foreign inflows to increase only slowly, in order to avoid destabilizing the market.
Also, in contrast to the United Arab Emirates and Qatar when MSCI decided in mid-2013 to upgrade them to emerging market status, the Saudi market is not cheap at present; Capital Economics estimates it is trading at about 19.3 times earnings, above a long-run average of below 17 times.
SABIC, for example, closed at 129.25 riyals and is now near the 130 riyal median target of 14 analysts surveyed by Reuters.
Among other gainers on Wednesday was Saudi Electricity Co , which climbed 1.5 percent after it said it would receive a payment of 1.5 billion riyals ($400 million) from oil giant Saudi Aramco as settlement of claims for using its electricity transmission systems.
Meanwhile, markets in the UAE and Qatar pulled back on Wednesday. Dubai's bourse slipped 0.2 percent because of property-related stocks; builder Arabtec fell 1.7 percent, and Emaar Properties and Union Properties were down 2.1 and 1.9 percent respectively. Emirates REIT bucked the trend, rising 1.4 percent after it reported net profit for the first half of this year jumped 194 percent to $34.15 million.
Abu Dhabi's benchmark edged down 0.3 percent amid a mixed performance by major banks. National Bank of Abu Dhabi slid 1.4 percent, even though the lender beat analysts' estimates of its second-quarter profit and raised its full-year profit outlook.
But Abu Dhabi Commercial Bank and First Gulf Bank , both of which reported quarterly results in line with estimates on Tuesday, added 2.4 and 0.8 percent respectively.
Qatar's bourse edged down 0.5 percent. Steel-to-petrochemicals conglomerate Industries Qatar fell 1.2 percent and Gulf International Services (GIS) , which provides drilling and other services to firms such as Qatar Petroleum, slid 1.5 percent.
GIS reported a 75 percent jump in second-quarter profit on Wednesday morning, but that failed to impress. Half-year profit totalled 463.7 million riyals ($127.4 million), in line with the company's projection in April that full-year profit would come to 900 million riyals.
Vodafone Qatar edged up 0.3 percent after reporting a narrowing quarterly loss. It made a net loss of 27.4 million riyals in the three months to June 30, better than the loss of 84.9 million riyals it posted in the same period last year, as well as analysts' consensus forecast of a 37.5 million riyal loss.
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