Oversold Saudi stocks snap losing streak

TADAWUL INDEX CLOSES 1.58% HIGHER AS OIL NEARS $50

BY SIDDESH SURESH MAYENKAR

Oversold Saudi stocks snapped a five session losing streak from their lowest level in five months as investors resorted to broadbased buying and oil prices neared $50 (Dh180) again.

Saudi Arabia’s Tadawul index closed 1.58 per cent higher at 6,071.41, after hitting a low of 5,910.55, a level last seen on April 3. The index lost 3.8 per cent in the last five session.

“The market was oversold, so valuations started to be seem more attractive. Investors used the current levels to get into some stocks,” Tareq Qaqish, head of asset management at Al Mal Capital told Gulf News.

On the technical front, the Relative Strength Index (RSI) was placed at 33, after touching below 30 last week, indicating that the index has fallen too quickly. Plus, the index has underperformed the Dubai index and other emerging markets, The Tadawul index has shed 12 per cent since the start of the year, the emerging market index has gained 14 per cent. The Dubai index has managed to register 12 per cent gains since January.

In terms of valuations, emerging markets have been trading at 12 times price earnings ratio, which could be considered attractive, Qaqish said. Emerging market price earnings ratio was placed at 13.6 times price earnings ratio multiple. “We expect to see more interest in Saudi stocks, but we would have a cautious view until we see the implementation of new policies,” Qaqish said.

Banking and petrochemicals led the gains in trade. Alima Bank closed less than a per cent to end at 12.65 Saudi Riyals, while Dar Alarkan Real Estate ended more than 4 per cent higher.

About 164 stocks in trade rose, while only four fell, indicating that buying was witnessed in most of the stocks.

Support levels

The Dubai index held above the support levels as investors accumulated selective stocks like Aramex, Takaful Emarat.

“Trading sentiments remain intact in UAE and price multiples now look even more attractive compared to other benchmarks,” Talal Touqan, Head of Research and Advisory at Al Ramz Capital. Dubai index may witness resistance at around 3,504/3526.

The Dubai Financial Market General Index closed 0.06 per cent lower at 3,490.27. Of 34 stocks traded on the exchange, shares of 17 firms rose, while another 14 fell. Analysts said Aramex may witness another leg up, after closing 3.9 per cent higher at Dh4.00. Emaar Properties closed 0.14 per cent higher at Dh7.05, while Amanat closed 1.43 per cent higher at Dh0.852.

“After second quarter results, markets need new investors to bring in new cash,” said Qaqish, adding, “that is why we see investors hesitant to put in more capital.” In Abu Dhabi, the general index closed 0.44 per cent lower at 4,499.74. Eshraq Properties closed 2.56 per cent lower at Dh0.80, while Dana Gas closed more than 1.5 per cent lower at Dh0.55.