Saudi Arabia leads Gulf stock gains

25/04/2016 05:07 AST

Saudi Arabian stocks led an advance across most Gulf Arab equities as the country prepared to announce a road map for the post-oil era.

The Tadawul All Share Index added 1.7 per cent, the most in more than a month and extending gains after it entered a so- called bull market on Thursday.

The kingdom is scheduled to set out a comprehensive plan on Monday to diversify its economy and shore up government finances after a collapse in oil prices.

The Bloomberg GCC 200 Index, which tracks the region’s largest and most liquid stocks, rose 0.6 per cent. The “Vision for the Kingdom of Saudi Arabia” will encompass several developmental, economic, social and other programmes the country’s deputy crown prince told Bloomberg this month.

“The key piece of news will be the announcement out of Saudi Arabia tomorrow on its transformation plan,” said Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi.”Investors, including us, are on the sidelines until we know what their plan is.

We don’t know what the impact of the announcement will be on markets, so investors are in wait-and-see mode.” The rally in Saudi Arabian stocks has driven valuations to the highest in six months.

Companies on the gauge are trading at about 13 times expected earnings, compared with about 12 times for those on MSCI Inc.’s emerging-markets measure. Dubai’s DFM General Index was little changed as about 239 million shares traded, 47 per cent below the 20-day average.

Emirates Integrated Telecommunications increased 2.1 per cent. The company known as Du has gained 9.1 per cent in the past five days as trading volumes spiked.

“Speculation that the company may adjust its foreign ownership limits is driving Du higher,” said Sanyalak Manibhandu, the Abu Dhabi-based head of research at NBAD Securities, who has a reduce rating on the stock.

His price target is 6 dirhams, 10 per cent below Sunday’s level.” Even if the company does change its ownership structure, it might be too late for it to be included in MSCI’s next review.

The Gulf Today