Region rises as Saudi gains for ninth day
Major stock markets in the Middle East rose slightly yesterday, outperforming sluggish bourses in Asia and Europe, as Saudi banks continued rebounding on the back of October’s huge international bond issue by their government.
The bond issue has allowed the government to suspend, at least temporarily, domestic bond sales and, in conjunction with other steps, this has started to ease a liquidity crunch in the banking system due to low oil prices. Short-term Saudi money rates have fallen in the last two days. That has sustained a rally in the stock market, where the main index climbed for a ninth straight trading day yesterday, gaining 0.6 percent in active trade. It has surged 10.1 percent during the nine-day period, although it is still 10.3 percent below its July peak.
The banking sector index added 0.5 percent as the biggest lender, National Commercial Bank, rose 0.7 percent. On Sunday it had rocketed 7.7 percent in its heaviest trade since July 2015. Among other gainers, telecommunications firm Zain Saudi and miner Ma’aden both rose 3.5 percent. As money flowed into such stocks, the petrochemical sector underperformed, edging up only 0.2 percent.
A monthly Reuters poll of fund managers, Reuters was 499.3 million riyals.
In Egypt, the index climbed 0.3 percent, although exchange data showed foreign investors were net sellers by a large margin as the Egyptian pound continued to slide against the US dollar on the black market.
Three currency traders were buying dollars yesterday for 17.5 to 17.85 pounds and selling them to importers for 18 to 18.2 pounds, compared to an official exchange rate of 8.88. Massive uncertainty over the risk of a devaluation of the pound is deterring many foreign investors from building positions. — Reuters