Saudi Stocks Climb Most in Gulf After Oil Gains on Freeze Talks

EghtesadOnline: Saudi Arabian stocks led advances across most Gulf markets as investors bet companies in the kingdom stand to benefit if oil-producing nations agree an output freeze.

News ID: ۷۳۶۵۵۳

04 September 2016

The kingdom’s Tadawul All Share Index added 0.8 percent to 6,0070.13 as of 12:03 p.m. in Riyadh, with Al Rajhi Bank contributing the most to the gain. Bloomberg’s index of the largest and most liquid companies in the six-nation Gulf Cooperation Council climbed for the first time in three days.

According to Bloomberg, shares in the region’s biggest equity market rose on bets Russia and OPEC may agree an oil output freeze at a meeting later this month. The gains come as the world’s largest crude exporter relaxed rules for foreign investors in a bid to lure overseas cash, one of a number of steps to break the kingdom’s dependence on oil.

“As speculation about an eventual oil output freeze grows, investors increase their bet that Saudi stocks will be able to recover,” said Mohammed Alsuwayed, the head of capital and money markets at Adeem Capital in Riyadh. “The change in regulation is a step necessary to attract foreigners, but there still is a lot of skepticism about inflows coming. Gains we see today can be very short lived.”

Worst Performance

The Tadawul has dropped 12 percent this year, the worst performance in the GCC. The companies on the index are trading close to the cheapest level in over five years compared to emerging-market peers based on future earnings.

From Sunday, foreign funds with at least $1 billion will be allowed to invest in Saudi stocks, down from the previous threshold of $5 billion. Beginning next year, qualified foreign investors will be able to take part in IPOs. Individual foreign investors will be permitted to double the limit of their stock purchases, while sovereign wealth funds and university endowments will be allowed access to the local market for the first time.

Dubai’s DFM General Index climbed 0.5 percent. Oman’s MSM30 Index advanced 0.2 percent as did Bloomberg’s GCC 200 Index. Kuwait’s SE Price Index fell 0.4 percent while Qatar’s QE Index dropped 0.3 percent and Abu Dhabi’s ADX General Index lost 0.1 percent.