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19 March 2024

Bourses rise on oil, Saudi budget hopes

Net foreign investment on the market reaching Dh39.6m during the period (Supplied)

Published
By Reuters

Most Gulf equity markets continued rising on Monday but their uptrend slowed, suggesting the benefits of stabilising oil prices and expectations for a large Saudi Arabian state budget had now largely been factored into stocks.

The main Saudi index closed 0.3 per cent higher, after jumping 16 per cent over the previous three days. Turnover remained active but dropped by about a fifth from Sunday's level.

Brent crude climbed over 1 per cent to above $62 per barrel on Monday. Analysts said Brent had received broad support after testing $60 a barrel earlier this month, and that a consensus was growing that prices would likely remain above that level for the rest of the year.

This has improved sentiment among Gulf stock market investors, even though the long-term outlook for oil prices remains murky and fresh falls cannot be ruled out next year.

Also, contrary to the stock markets' earlier fears, Saudi Arabia's 2015 budget is not expected to cut spending much if at all in response to the recent slide of oil prices.

Saudi Finance Minister Ibrahim Alassaf went out of his way to reassure the markets last Wednesday when he said his government would continue spending strongly on development projects and social benefits in the budget.

The budget was originally expected to be announced on Monday afternoon, but Saudi media reported the release would occur later this week, after a special cabinet meeting.

Monday saw profit-taking in some stocks which led the recent rally such as property developer Dar Al Arkan, which fell 0.8 per cent and was again the most heavily traded Saudi stock. On Sunday, Dar Al Arkan had soared 9.3 per cent.

But petrochemical producer Saudi Kayan, up 9.8 per cent on Sunday, added a further 6.2 per cent on Monday. Other major gainers included second- or third-tier stocks that had been neglected in the rally, such as Islamic insurer Solidarity , up 5.6 per cent.

DUBAI

The Dubai index climbed 2.3 per cent after jumping 9.9 percent on Sunday and 13.0 per cent on Thursday. Bourse operator Dubai Financial Market soared 10.1 per cent, a fresh sign that investors believe the bruising downtrend in Gulf equities of recent weeks has ended and that investor activity will revive.

Qatar rose 3.3 per cent; property developer Ezdan Holding was the most heavily traded stock, rising 3.4 per cent.

Gulf International Services, an oil and gas drilling services firm which was hit hard during recent weeks because of the slump in oil prices, surged its 10 percent daily limit.

"The recent sell-off in the Gulf has opened up opportunities in the Qatar market, given the undemanding valuations sparked by the current volatility," Nick Wilson, chairman of London-listed Qatar Investment Fund, said in a note.

He estimated the Qatar index's prospective price/earnings ratio at 13.7 times with a dividend yield of 4.4 per cent, which he said was attractive given the fact that Qatar needs a relatively low oil price to balance its budget.

But Gulf Warehousing sank 0.6 per cent to 53.00 riyals in active trade after its board proposed boosting the company's capital by 25 per cent via a rights issue to shareholders at 40.00 riyals per share.

Oman's market climbed 3.7 per cent. It has outperformed most of the Gulf since the executive president of the State General Reserve Fund, the country's largest sovereign wealth fund, told Reuters at the end of last week that the SGRF had boosted its buying of shares in the local market because prices had slid to attractive levels.

The Tunisian market rose 0.6 per cent, bringing its gains in the last four trading days to 3.7 per cent, though it closed well off its intra-day high.

Veteran politician Beji Caid Essebsi declared victory in Sunday's presidential run-off vote, seen as the last step in Tunisia's shift to full democracy four years after an uprising ousted Zine El Abidine Ben Ali.

MONDAY'S HIGHLIGHTS


DUBAI
* The index rose 2.3 per cent to 3,852 points.

ABU DHABI
* The index fell 0.9 per cent to 4,478 points.

SAUDI ARABIA
* The index edged up 0.3 per cent to 8,547 points.

QATAR
* The index gained 3.3 per cent to 12,421 points.

EGYPT
* The index edged up 0.2 per cent to 8,703 points.

OMAN
* The index climbed 3.7 per cent to 6,219 points.

KUWAIT
* The index rose 1.1 per cent to 6,503 points.

BAHRAIN
* The index edged down 0.3 per cent to 1,406 points.