Tadawul pulls back as Dar Al Arkan drops

Saudi Arabia’s stock market pulled back yesterday as a bubble in shares of real estate company Dar Al Arkan burst, while equities in Qatar pulled further away from six-year lows.

The Saudi index retreated 0.6 per cent as Dar Al Arkan, which had gained as much as 3.4 per cent in early trade, closed 9.9 per cent lower at 12.60 Saudi riyals. It was by far the market’s most heavily traded stock.

Dar Al Arkan had jumped from around 7.50 riyals in mid-November, when international index compiler MSCI said it was adding the stock to its Saudi Arabia Index. Retail investors piled into the stock in recent days, drawn by its volatility. But the stock climbed far beyond what many analysts considered fair value, to about 51 times trailing earnings, according to Thomson Reuters data. Three analysts surveyed have a median target price of 5 riyals for the stock; two rate it a “hold” and one a “sell”.

Saudi cement shares stayed strong, however. They have been rising in recent weeks, partly on hopes that the government will spend more heavily on major construction projects next year after three years of austerity. Riyadh is expected to release its 2018 state budget next week.

Jouf Cement jumped 5.9 per cent to its highest level since early 2016 in heavy trade.

Qatar’s index shot up in late trade to close 1.2 per cent higher, rebounding from the six-year lows it has been languishing at for much of the last month.

In Dubai, the index rose 0.6 per cent as real estate firm Emaar Development, which hit a record closing low of Dh5.34 last week, rebounded 2.6 per cent to Dh5.49. Its shares were sold in last month’s initial public offer at Dh6.03.

Shares in Abu Dhabi had their best day since mid-July, rising 1.4 per cent, as shares in bellwether stock Etisalat surged 3 per cent. Fellow bluechip First Abu Dhabi Bank rose 1.5 per cent, on a day of thin trading.

The Saudi index retreated 0.6% as Dar Al Arkan, which had gained as much as 3.4% in early trade, closed 9.9% lower