Saudi stocks only bright spot in region

Saudi stocks were lifted yesterday by optimism about fund flows, while other bourses in the region were lacklustre.

The Saudi index closed 1 per cent higher, lifted by financial stocks. Insurance company Bupa Arabia gained 5.5 per cent after it recommended an increase in capital to 1.2 billion riyals ($320m) from 800m riyals through a one-for-two bonus share issue.

Banks were also up, with Al Rajhi Bank gaining 2.7 per cent, returning to the multiyear high hit last week.

“Investor sentiment is still positive on Saudi due to relatively higher oil prices. Overall, we have positive vibes in the market for now ahead of a (potential) MSCI upgrade,” said Muhammad Faisal Potrik, head of research at Riyad Capital. Index compiler MSCI will decide in June whether to upgrade Riyadh to emerging market status.

In Dubai, Emaar Properties fell 1.7 per cent, pushing the index 0.3 per cent lower.

Emaar, which has lost 10 per cent so far this year because of a weak local real estate market, has been a big drag on the index. In Oman, National Bank of Oman fell 1.6 per cent after it reported a nearly 9 per cent drop in quarterly net profit to 12.6m rials ($32.72m), below EFG Hermes’s forecast of 13.3m rials but above Gulf Baader Capital Markets’ 11.1m rials. Meanwhile, nervousness about new Western sanctions on Russia kept the rouble and Moscow stocks on the back foot yesterday, while emerging markets were weak generally after the latest clamp-down on risky lending in China hit its markets. A host of stories were unfolding, including Hong Kong dollar pressure, political strains in Kenya and Zambia and a surprise ratings upgrade for Poland, but it was the swings in Russia that again dominated the markets’ focus.

The rouble had recovered most of its early losses against the dollar but was still slightly weaker against the euro, trading at 61.92 and 76.52 respectively.

Moscow’s dollar-denominated RTS share index fell 0.6 per cent to 1,098.26 points and the rouble-based MOEX index dropped 0.2 per cent to 2,171.28 points.

Aluminium giant Rusal, which was the main victim of the latest sanctions, saw its shares shed another 6 per cent too, though sovereign bond markets were notably calmer after their recent lurches.