Regional stocks gain on $65 oil price

Middle East stock markets mostly rose yesterday after the shutdown of a North Sea pipeline pushed Brent oil above US$65 a barrel for the first time since mid-2015.

The Saudi stock index gained 0.3 per cent, with petrochemical companies, whose profit margins tend to benefit from higher oil prices, outperforming. Saudi Kayan added 3.7 per cent and Petro-Rabigh rose 3 per cent.

Utility Saudi Electricity climbed 3.5 per cent. The state budget for 2018 will be announced next week and officials may detail plans to raise domestic energy prices, which could benefit the company’s earnings depending on the structure of the price hikes.

But real estate firm Dar Al Arkan, the most heavily traded stock, fell 1.4 per cent to 12.42 Saudi riyals after plunging 9.9 pe rcent on Monday. The stock has been a focus of the Saudi stock market in recent weeks, soaring to a close of 13.99 riyals in heavy trade on Sunday from around 7.50 riyals in mid-November, when international index compiler MSCI said it was adding the stock to its Saudi Arabia Index.

But many analysts think it may have become overvalued because of heavy speculative buying by local retail investors, who pushed its valuation above 50 times trailing earnings.

Dubai’s index added 1.2 per cent as builder Drake & Scull, which posted a big loss for the third quarter, shot up 6.7 per cent to its highest level since February. Some investors are betting that restructuring will help the company report much better fourth-quarter earnings.

In Abu Dhabi, the index gained 0.6 per cent on the back of Abu Dhabi Commercial Bank, which climbed 3.5 per cent.

Qatar’s index surged 1.4 per cent, rebounding for a third straight day from near six-year lows. Real estate firm Ezdan jumped 6.3 per cent and shipper Qatar Navigation rose 4.2 per cent.

Egypt’s index rose 1.1 per cent as blue chip lender Commercial International Bank gained 1.6 per cent, bouncing from near its lowest levels this year.

Emerging equities fell yesterday after two days of strong gains as markets looked to a US Federal Reserve meeting and potential policy tightening in China, though a rise in the oil price underpinned energy producers. MSCI’s benchmark emerging stocks index slipped 0.5 per cent.