Bud­get boosts Saudi, Rest of Gulf slug­gish

MIDEAST STOCK MAR­KETS

Kuwait Times - - BUSINESS -

Saudi Ara­bia’s stock mar­ket rose sharply yes­ter­day in re­sponse to the re­lease of the 2017 state bud­get, which in­cludes an in­crease in govern­ment spend­ing, while other ma­jor Gulf bourses were slug­gish and Egypt re­treated on profit-tak­ing. The Saudi stock in­dex added 1.5 per­cent to 7,191 points, near­ing tech­ni­cal re­sis­tance on this year’s peak of 7,235 points, hit ear­lier this month. Trad­ing vol­ume rose to its high­est in over a week.

Fi­nan­cial an­a­lysts gen­er­ally wel­comed the bud­get as balanc­ing the need to con­tinue cut­ting Saudi Ara­bia’s fis­cal deficit with sup­port for eco­nomic growth. But many said it would not avert a fur­ther slow­down next year from the 1.4 per­cent gross do­mes­tic product growth in 2016.

“We ex­pect that the econ­omy will con­tinue to de­cel­er­ate in 2017, dragged down by slower growth in the oil sec­tor, while non-oil sec­tor growth is ex­pected to re­bound but re­main sub­dued,” Jadwa In­vest­ment said in a post­bud­get re­port. Na­tional Com­mer­cial Bank pre­dicted the econ­omy would con­tract by 1.0 per­cent in 2017 as Saudi Ara­bia cut oil out­put in line with an OPEC agree­ment, and that the non-oil sec­tor would ex­pand only 1.2 per­cent.

Nev­er­the­less, util­ity Saudi Elec­tric­ity jumped 8.7 per­cent af­ter the govern­ment said in the bud­get it would raise do­mes­tic fuel and elec­tric­ity prices by un­spec­i­fied mar­gins later this year.

The petro­chem­i­cal sec­tor was strong, ris­ing 2.2 per­cent, af­ter the govern­ment said it would not raise gas feed­stock prices be­fore 2019. A feed­stock price hike in the 2016 bud­get squeezed some petro­chem­i­cal pro­duc­ers’ mar­gins. Con­struc­tion firm Ab­dul­lah Ab­dul Mohsin AlKho­dari and Sons gained 1.9 per­cent af­ter the govern­ment pledged to raise in­fra­struc­ture spend­ing, said it had set­tled un­paid bills to the pri­vate sec­tor, and promised to set­tle fu­ture bills within 60 days of re­ceiv­ing them. Con­struc­tion was plagued by de­lays in re­cov­er­ing money from the govern­ment this year.

Zain Saudi rose 1.9 per­cent af­ter say­ing it was in talks to sell its mo­bile trans­mit­ter towers to a con­sor­tium of TASC SAL and ACWA Hold­ing. Ri­val Mo­bily edged down 0.2 per­cent af­ter the United Arab Emi­rates’ Eti­salat, which owns 27.4 per­cent of Mo­bily, said its man­age­ment agree­ment with Mo­bily had ex­pired and the com­pa­nies would ne­go­ti­ate a new tech­ni­cal al­liance.

Else­where in the Gulf, ma­jor mar­kets moved lit­tle and trade was thin in the ab­sence of for­eign in­vestors dur­ing the Christ­mas hol­i­days. Dubai’s in­dex edged up 0.2 per­cent in a broad-based rise although re­tail and hos­pi­tal­ity firm Marka, which surged last week af­ter news that its chief ex­ec­u­tive Nick Peel had re­signed, fell back 3.1 per­cent. Abu Dhabi inched up 0.1 per­cent as Eti­salat rose 0.6 per­cent. Qatar’s in­dex fell 0.3 per­cent.

Egypt’s in­dex dropped 1.4 per­cent as Oras­com Tele­com, the most heav­ily traded stock, pulled back 4.6 per­cent. But Ara­bia Cot­ton Gin­ning climbed 5.9 per­cent af­ter its board ap­proved split­ting the com­pany into two sep­a­rate en­ti­ties.

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