Tadawul ends the day unchanged

Saudi Arabia’s stock market closed flat yesterday, apparently in response to buying by state-linked funds.

The Saudi index spent most of the day lower and was down as much as 0.9 per cent before a burst of buying in the final 20 minutes lifted it to close 0.02 per cent higher – a pattern seen on almost every day since the government announced a sweeping anti-corruption purge two weeks ago.

Many asset managers believe that with over 2,000 bank accounts frozen in the purge and many tycoons and individual investors alarmed by the huge extent of the crackdown, state-linked funds have been mounting an operation to stabilise the market and prevent panic from spreading.

Real estate firm Dar Al Arkan, the most heavily traded stock, plunged 9.6 per cent.

Al Tayyar Travel, whose founder has been detained in the probe, sank a further 4.3 per cent; it has lost 28 per cent in the past two weeks.

Banque Saudi Fransi shot up 3.7 per cent. On Wednesday the bank said chief executive Patrice Couvegnes had been dismissed and would be replaced by Rayan bin Fayez, who resigned as chief executive of food maker Savola.

In a report, Bank of America Merrill Lynch said it was positive about the Saudi market, partly because of an attractive valuation, at a forward 12-month price-earnings ratio of 13 times, which was in line with other emerging markets; historically, Riyadh has been at a 20 per cent premium. But the investment bank said demand for Saudi stocks could be dampened for now by geopolitical risks and a lack of clarity on economic reforms.

“As such, we view it unlikely that the market would outperform peers until greater comfort is obtained on these issues, which could emerge with the 2018 budget in the fourth quarter of 2017.”

Dubai’s stock index edged down 0.2 per cent as Emaar Properties closed 0.3 per cent lower. It priced the IPO of its unit Emaar Development at Dh6.03 per share, in the lower half of an indicative range of Dh5.7 to Dh6.9 dirhams set earlier this month.

Some fund managers said the pricing was lower than Emaar could have achieved given the size of institutional demand, and that Emaar seemed to be accepting a lower pricing to make sure retail investors bought into the IPO.