Saudi stocks up, but rest of Gulf lacklustre

Saudi Arabia’s stock market continued a strong upwards trend yesterday because of inflows of foreign funds and strong corporate earnings, while the rest of the Gulf was lacklustre.

Latest exchange data showed foreigners bought a record $384 million of Saudi Arabian stocks on a net basis last week, anticipating much bigger inflows of funds when Riyadh joins emerging market indexes next year. The Saudi stock index rose 1 per cent, bringing its gains so far this year to 15 per cent. Bank Aljazira was up 5.1 per cent after Bahrain’s Ahli United Bank said it acquired a 7.3 per cent stake in the Saudi Islamic lender. Ahli United dropped 1.6 per cent.

Saudi Telecom rose 1.5 per cent after it reported first-quarter profit of 2.59 billion riyals versus 2.53bn riyals last year, broadly in line with analysts’ forecasts.

Another telecoms firm, Mobily, jumped 4.5 per cent after it narrowed its first-quarter loss to 93m riyals from a loss of 163m riyals a year ago.

Meanwhile, Dubai was weak – partly, fund managers say, because money has been flowing from Dubai to the red-hot Saudi market. The index was down 0.6 per cent at a fresh two-year closing low.

“Investors’ confidence is very weak, which is understandable and due to several factors, like inconsistent dividend policies and sizeable losses at several listed companies,” said Tariq Qaqish, managing director of the asset management division at Menacorp.

Damac Properties tumbled 7.1 per cent after the company lowered its annual cash dividend to 15 fils per share from 25 fils. Abu Dhabi’s index was up 0.2 per cent on the back of Abu Dhabi National Energy Co, which rocketed 14.6 per cent in its heaviest trade since last August; it has soared in the past month, partly because of strength in global energy prices. Juhayna Food Industries surged 3.9 per cent to 13.50 Egyptian pounds after reporting a 38 per cent yearon-year jump in first-quarter consolidated net profit, on a 20 per cent rise in sales.

The stock has risen from below 4.0 pounds at the time of the Egyptian pound’s devaluation in November 2016, and by some measures is overvalued, with its 12-month trailing price-earnings ratio at 62 times. Ten analysts covering the stock have a median target price of 10.75 pounds.