Tadawul slips with petchems mixed

Saudi Arabia’s stock market slipped yesterday in thin trade, with the petrochemical sector narrowly mixed.

The index, which ended last year 8.3 per cent higher, was down 0.3 per cent to 7,798.39 points.

Among gainers was Zamil Industrial Investment, which put on 2 per cent, Saudi Arabia Refineries, ending up 1.2 per cent, and Aldrees Petroleum and Transport Services, which gained 1 per cent,

Among the fallers was Saudi Industrial Investment Group, down 3.5 per cent, National Petrochemical (Petrochem), which shed 1.6 per cent, and National Shipping Company of Saudi Arabia (bahri), which slipped 0.4 per cent. Other major Middle East stock markets were closed for New Year holidays.

The Saudi stock market expects a major inflow of a foreign funds regardless of oil prices or geopolitical tensions, thanks to its impending entry into emerging-market indexes, a Reuters poll showed on Monday.

Riyadh will join FTSE Russell’s index in stages between March and December 2019, and join MSCI’s index in phases coinciding with reviews in May and August. All told, this is expected to attract about $15 billion of “passive”, benchmark-linked funds and billions more of active funds.

“Saudi market inclusion into MSCI EM and FTSE EM indices next year will provide much-needed liquidity,” said Talal Samhouri, head of asset management at Amwal.

Fifty-four per cent of managers expect to raise their Saudi equity allocations and none to reduce them.

Meanwhile, MSCI will decide in mid-2019 whether to upgrade Kuwait to emerging market status. Entry into its index would probably only occur in mid-2020, but any positive decision by MSCI could trigger a market rise immediately.

As a result, 54 per cent of managers expect to raise Kuwait equity allocations and only 15 per cent to cut them.

Many managers said they were not expecting oil prices to stay low. Mr Samhouri predicted a Brent range of $60 to $70 per barrel this year.

Gold market watchers will be keeping an eye on prices after the yellow metal headed for its first annual decline since 2015 on Monday, having lost last year to dollar strength due to trade tensions and rising rates by the US Federal Reserve.