MIDEAST STOCK MAR­KETS

Kuwait Times - - BUSINESS -

Saudi Ara­bia’s in­dex firmed yes­ter­day as blue-chips re­sumed their climb and the pos­i­tive mood flowed into other Gulf bourses, car­ry­ing them higher. Egypt’s mar­ket edged up, hold­ing near an 8-year peak as for­eign funds re­mained ag­gres­sive buy­ers. Riyadh’s in­dex bounced 3.0 per­cent to 6,796 points, clos­ing 93 points over tech­ni­cal re­sis­tance at the July peak of 6,703 points. Turnover was almost dou­ble that of Tues­day.

Some blue chips con­tin­ued to at­tract funds, with the top telecom­mu­ni­ca­tion op­er­a­tor Saudi Tele­com Co (STC) jump­ing 4.6 per­cent. Riyad Cap­i­tal said in note that STC has main­tained its div­i­dend pol­icy of 1 riyal per quar­ter and they be­lieve it has the abil­ity to in­crease div­i­dend pay­out be­cause of its sound fi­nan­cials and strong cash po­si­tion. “The com­pany has 20 bil­lion riyals in liq­uid as­sets con­sist­ing of cash and short term in­vest­ment, three times its to­tal debt.” Some of the large-cap petro­chem­i­cal pro­duc­ers also ended on a strong foot­ing, de­spite now trad­ing at a slight pre­mium to the their es­ti­mated fair val­ues. Bell­wether Saudi Ba­sic In­dus­tries climbed 4.1 per­cent to 90 riyals; the av­er­age fair value ac­cord­ing to Thomson Reuters data is 88.68 riyals. Bank­ing shares, which suc­cumbed to profit tak­ing in re­cent days, firmed. All of the 12 listed lenders gained with Na­tional Com­mer­cial Bank clos­ing 4.7 per­cent higher.

Many an­a­lysts be­lieve that since there has been a shift in both the do­mes­tic and global macro en­vi­ron­ment, in­vestors are bet­ting that banks will be able to re­cover some of their prof­itabil­ity, with some banks now in a po­si­tion to po­ten­tially in­crease their earn­ings next year.

Do­mes­ti­cally, the in­ter­bank lend­ing rates have come down sig­nif­i­cantly since the sov­er­eign in­ter­na­tional bond sale last month; 3 month SAIBOR is at 2.1 per­cent, af­ter hit­ting a seven-year high of 2.386 per­cent in Oc­to­ber.

Gold­man Sachs said in a note: “Saudi banks re­main pos­i­tively geared to higher global rates given high cur­rent ac­count bal­ances, pre­dom­i­nantly a cor­po­rate loan book mix and mon­e­tary pol­icy which closely tracks the US. As a re­sult, in­ter­est rate tight­en­ing by the Fed should trans­late into a pos­i­tive net in­ter­est mar­gin up­lift for the banks.”

Dubai’s main in­dex added 1.8 per­cent, with the mo­men­tum build­ing in the fi­nal hour of trade. Small and mid­sized shares, usu­ally traded by lo­cal in­vestors, were chief gainers with builder Arabtec surg­ing by its 15 per­cent daily limit in heavy trade. Dubai Fi­nan­cial Mar­ket, the only listed ex­change in the Gulf, jumped 6.2 per­cent.

Abu Dhabi’s in­dex rose 1.0 per­cent as Dana Gas added 1.8 per­cent. Lenders that are set to be merged at the start of 2017 gained with First Gulf Bank adding 2.2 per­cent and Na­tional Bank of Abu Dhabi clos­ing 1.6 per­cent higher.

EGYPT CLINGS NEAR 8-YEAR PEAK

Cairo’s in­dex of the most ac­tively traded shares edged up 0.3 per­cent, climb­ing back near an 8-year peak, but the num­ber of trades fell by a third from the pre­vi­ous ses­sion. The in­dex has now climbed 35.5 per­cent since the cen­tral bank ditched the cur­rency peg to the US dol­lar on Nov 3 and faces strong tech­ni­cal re­sis­tance at its record 2008 peak of 12,039 points. For­eign funds re­mained net buy­ers of shares on Wed­nes­day while lo­cal and re­gional traders cashed out, ac­cord­ing to ex­change data.

For a se­cond day in a row, the broader in­dex has out­per­formed, clos­ing up 1.7 per­cent, sug­gest­ing that in­vestors are pre­fer­ring the less liq­uid names as an at­trac­tive bargain. —Reuters

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