Blue-chip firms push Saudi stocks up

 

This was the Tadawul All-Share Index’s strongest rise since December 11, according to Reuters data, and it was driven by gains in all blue-chips that are expected to post high earnings for the fourth quarter of 2007. The index closed at 11,416.49 points on the back of a SR15.75 billion (Dh15.7bn) turnover, the highest since December 12.

Saudi Basic Industries Corporation closed 4.5 per cent higher and Al Rajhi Bank rose by the maximum 10 per cent. Analysts said much of the UAE markets will be driven by real estate, banking and energy stocks, with the Dubai Financial Market not expected to begin the week with a big rally. “We anticipate an upside for DFM, but a minor correction will happen later in the week,” Sherif Abdul Khalek, Dealing Room Manager at Al Futtaim HC Securities, told Emirates Business.

Real estate scrip such as Emaar Properties, Deyaar and Union Properties will hog the limelight, he said.

Emaar has been performing well since the last week of December after it received a 10 per cent share buy-back approval from the Securities and Commodities Authority.

The stock broke past the Dh15 mark on the first trading day of 2008, rising another 0.98 per cent to close at Dh15.35 on January 3. However, analysts predict average profit growth in the fourth quarter of 2007 will be negative by 5.3 per cent to Dh1.62bn against Dh1.71bn in the corresponding period in 2006. For the full year, analysts forecast profit of Dh6.459bn as against Dh6.371bn in the previous year. There is renewed interest in Emirates NBD, Commercial Bank of Dubai and Dubai Islamic Bank shares after the UAE Central Bank Governor said that combined profits have risen by 25 per cent in 2007.

As reported earlier by Emirates Business, market sentiment is positive as the economy is set to register further growth in the gross domestic product, as oil prices scale higher.

“Higher oil prices mean higher fiscal surpluses,” Faisal Hasan, head of research at Kuwait-based Global Investment House, told Bloomberg. “Some of that will trickle down to equity markets as more projects come online.”

Despite foreign participation increasing in a number of DFM-listed scrips, overseas investors are still vying for opportunities in the stock markets. Shares of Taqa, Dana Gas and Aabar Energy on the Abu Dhabi Securities Market are expected to gain on back of rising prices of crude oil. Last week, Taqa completed its $550 million (Dh2bn) acquisition of Talisman Energy’s fields in the Brae area of the North Sea.

After international investment banks upgraded their outlook for the Abu Dhabi real estate market, Aldar Properties, Sorouh and RAK Properties have seen increases in trading volume, which is expected to continue this week. However, analysts don’t relate higher volumes to the extended one-hour trading session on the bourses. Rather they attribute it to strong fundamentals that are driving up demand.