Saudi stocks rise to near 16-month high; Gulf mixed

Reuters/Dubai

Saudi Arabia’s bourse rose to a near 16-month high yesterday, close to last year’s peak, as investors bought shares in companies that they believed would profit from increased consumer spending during Ramadan, the holy month of fasting.

The index climbed 0.7% to its highest close since April 2012. Trading volumes were above the 30-day average for a second consecutive session.

“This is unusually high activity especially ahead of Eid holidays - investors are building positions on a positive earnings outlook for the third quarter,” said Asim Bukhtiar, head of research at Riyad Capital. Eid marks the end of Ramadan; the exchange will close for a week starting August 6.

Shares in food firm Almarai Co rose 4.1% and Savola Group advanced 2.4%.

“Food and agriculture Q3 numbers will benefit from higher sales in Ramadan. That expectation is being reflected in the market.”

Banking shares extended gains that they have made since telecommunications operator Zain Saudi reached an agreement with creditors to extend its outstanding $2.3bn Islamic loan facility by five years. The banking sector index added 1.1%; Zain Saudi gave up some of its earlier gains on the news, easing 0.5%.

Markets in the UAE were mixed. Dubai’s bourse climbed 0.9% to 2,889 points, its highest level since November 2008.

Shares in Emaar Properties rose 1.2%, extending gains since the developer posted a second-quarter profit on Monday that beat analysts’ estimates by a margin of 20%.

Budget carrier Air Arabia and top bank Emirates NBD gained 3.7 and 1.1% respectively.

Dubai’s rally is backed by heavy retail activity and long-term investors are also optimistic about companies’ fundamental outlooks for coming quarters.

Abu Dhabi National Energy (Taqa) shed 0.8% after the firm swung to a net loss of 172mn dirhams ($46.83mn) in the second quarter.

Abu Dhabi’s benchmark slipped 0.9%, its third loss in the last four sessions since it hit a near five-year high.

In Egypt, the market was little changed as buyers and sellers sat on the sidelines during a stand-off between the interim government and supporters of ousted President Mohamed Mursi.

“Buyers are on the sidelines on fears of further bloodshed and potential sellers are not selling because they expect a political resolution,” said Mohamed Radwan, director of international sales at Pharos Securities.

Cairo’s largest listed stock, Orascom Construction Industries, was removed from the main benchmark after Dutch-listed fertiliser firm OCI NV acquired more than 97% of OCI at the end of its tender offer earlier this week.

Some stocks that will have increased weightings in the index now, filling the gap left by OCI, gained.

Elsewhere, Kuwait’s index ticked up 0.07% to 8,070 points; Oman’s bourse slipped 0.4% to 6,643 points, while Bahrain’s measure gained 0.2% to 1,195 points.