Saudi Arabia’s petrochemical shares led a bourse rally yesterday as earnings boosted sentiment, while most regional markets also rose as they resumed trading after a week-long holiday and reacted positively to the US averting a debt default.
Shares in Saudi Kayan Petrochemical surged 9.6% to a nine-month high after it swung to a third-quarter profit.
The company made a profit of 43.3mn riyals ($11.55mn), compared to a net loss of 178.4mn riyals in the same period last year, according to a bourse statement.
Parent firm Saudi Basic Industries Corp (Sabic) jumped 5.4%, helping lift the sector’s index by 5% to a 17-month high.
“So far the petrochemical results have been better than expected - the biggest surprise is Kayan, which reported its first ever profit after eight quarters of operations,” said Iyad Ghulam, petrochemical analyst at NCB Capital. “It’s mainly from efficiencies - they’ve managed to reduce cost of operations.”
“The read across on Sabic from the petchem earnings so far is they might report better than expected results due to higher prices for the third quarter. We’ll see positive surprises on all firms,” he added.
The Saudi index rose 1.9% to a two-month high, breaking out of a sideways trend.
Shares in heavyweight Al Rajhi Bank dropped 1.9% after it reported that its third-quarter net profit fell 8.1% year-on-year. The figure was also 17% lower than analysts’ estimate.
In Dubai, the measure rose 2.8% to its highest level since November 2008 on renewed buying by retail investors supported by a positive global backdrop.
Global stock markets climbed to five-year highs on Friday as investors bet the US Federal Reserve would extend its stimulus policy well into 2014, while accelerated growth in China’s economy also lifted equity and commodity markets. A last-minute deal by US lawmakers last week to avert a debt default has also improved the mood.
“We were closed for the week during which the US resolved its debt ceiling issue, at least temporarily, and the government reopened. We’re playing catch-up to the spike in major markets,” said Sanyalaksna Manibhandu, senior analyst at NBAD Securities.
Expectations of Dubai winning the bid to host the World Expo 2020 are also supporting local sentiment. A win would spur faster infrastructure development and some optimism has already been priced into equity and property markets.
The winner is expected to be announced on November 27.
“In the absence of anything bad, we should continue to go up at least until the results of Expo 2020 (selection),” Manibhandu said.
Abu Dhabi’s benchmark slipped 0.3% after hitting an intraday two-month high as some booked profits. The market is up 45.6% in 2013.
Elsewhere, Kuwait’s index rose 1.8%, Oman added 0.5%, while Bahrain’s index climbed 0.8%.
In Egypt, the benchmark index advanced 1% to a 33-month high. It is also now above the key psychological level of 6,000 points.
“We’re affected by regional and global markets,” said Mohamed Radwan, director of international sales at Pharos Securities in Cairo. “There’s retail manipulation on mid-caps but the sentiment is positive in general.”
Shares in Orascom Telecom Media and Technology Holding and Arabia Investments Development jumped 3.2% and 6.7% respectively.