An economic upturn triggered by high oil prices and massive public spending is keeping Saudi bourse at high levels with the index climbing on Sunday to its highest point in more than a year, a key Saudi bank said on Tuesday.
Tadawul bourse, by far the largest and busiest stock market in the Middle East, climbed at the end of Sunday’s trading to 6,758.87, the highest level in over a year and by 5.3% since the beginning of 2012, National Commercial Bank (NCB) said in its weekly report, sent to Emirates 24/7.
“The strong start for the global economy this year, coupled with strong domestic corporate earnings, lifted stock prices higher….the strong upward trajectory is backed by a fundamentally sound economy. Indicators point for further increases albeit facing resistance levels around the 6,800 mark.”
The report showed that as of last week, most sector indices in the Riyadh-based bourse have posted gains year-to-date with the exception of energy and petrochemicals mainly due to SABIC falling short of earning expectations.
Top performing sectors, transport and multi-investment have recorded 18.4 per cent and 14.4 per cent YTD, respectively.
Investor appetite has increased drastically as witnessed by the expanding volumes of trade and daily traded values as excess liquidity in the market has shifted focus to stocks, said NCB, the largest bank in the Gulf Kingdom.
It said daily traded volumes recorded a 33-month high by reaching SR10 billion on Saturday. Moving forward into 2012, daily traded volumes averaged SR7 billion in comparison to last year’s SR3.6 billion over the same period.
“The strong appeal for stocks, if sustained, will push the index past resistance levels and close to the 6,900 level…. however, we expect investors to skim capital gains within the next week to keep TASI range bound between 6,650-6,750,” the report said.
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