Higher oil prices drive Saudi shares

Saudi Arabia’s stock market rose yesterday as banks and petrochemical shares gained amid rising oil prices.

The Saudi index was up 1 per cent, with Al Rajhi Bank gaining 0.9 per cent to 8,527 points. The Middle East’s largest petrochemical maker Saudi Basic Industries (Sabic) also rose 1 per cent in active trade after it said it would merge its units Saudi Petrochemical and Arabian Petrochemical.

The deal, which will be completed during the second half of the year, is part of the company’s plan to increase efficiency in its global operations. The Saudi index is up 8.9 per cent this year, outperforming major Arabian Gulf markets and led by foreign investors who have been net buyers of Saudi stocks this year.

Foreign investors have already poured 6.94 billion riyals into the Saudi market in the first two months of this year. Foreign net buying picked up in the first week of March, coming in at 985 million riyals, the highest since the week ending January 17, Arqaam Capital said.

Developer Arriyadh Development added 1.5 per cent after the Capital Market Authority approved an increase in capital to 1.78bn riyals, from 1.33bn riyals, through a bonus share issue.

The Abu Dhabi index was down 0.9 per cent to 4,819. Among gainers were Sudatel, which put on 2.7 per cent, Aldar, up 2.1 per cent, and Dana Gas, which rose 1.1 per cent.

Fallers included Emirates Telecommunications Group shedding 4.1 per cent. United Arab Bank fell 9.6 per cent in light trade, while Abu Dhabi Islamic Bank lost 2.4 per cent.

Banks in the UAE are expected to experience a rise in loan losses over the next 12 to 18 months as a decline in real estate prices and rising interest rates reduce borrowers’ cashflows, according to Moody’s.

In Dubai, the index was flat at 2,600 points, but courier company Aramex surged 9.1 per cent in its heaviest trading volume since December 2009 with 42.4 million shares changing hands, after the company said that Australia Post Transaction Services had sold its 10 per cent stake.

Aramex caps foreign ownership of its shares at 49 per cent and the stake sale has freed up a 10 per cent stake for foreigners to potentially buy.

Arqaam Capital said this was “an excellent time” to buy the stock.