Saudi lifts mood in regional markets

Dubai : Saudi Arabia’s index firmed yesterday as blue chips resumed their climb and the positive mood flowed into other Gulf bourses, carrying them higher. Egypt’s market edged up, holding near an 8-year peak as foreign funds remained aggressive buyers.

Riyadh’s index bounced 3.0 per cent to 6,796 points, closing 93 points over technical resistance at the July peak of 6,703 points. Turnover was almost double that of Tuesday.

Some blue chips continued to attract funds, with the top telecommunication operator Saudi Telecom Co (STC) jumping 4.6pc.

Banking shares, which succumbed to profit taking in recent days, firmed. All of the 12 listed lenders gained with National Commercial Bank closing 4.7pc higher.

Domestically, the interbank lending rates have come down significantly since the sovereign international bond sale last month; 3 month SAIBOR is at 2.1pc, after hitting a seven-year high of 2.386pc in October.

Goldman Sachs said in a note: “Saudi banks remain positively geared to higher global rates given high current account balances, predominantly a corporate loan book mix and monetary policy which closely tracks the US. As a result, interest rate tightening by the Fed should translate into a positive net interest margin uplift for the banks.”

Dubai’s main index added 1.8pc, with the momentum building in the final hour of trade. Small and mid-sized shares, usually traded by local investors, were chief gainers with builder Arabtec surging by its 15pc daily limit in heavy trade. Dubai Financial Market, the only listed exchange in the Gulf, jumped 6.2pc.

Abu Dhabi’s index rose 1.0pc as Dana Gas added 1.8pc. Lenders that are set to be merged at the start of 2017 gained with First Gulf Bank adding 2.2pc and National Bank of Abu Dhabi closing 1.6pc higher.

Cairo’s index of the most actively traded shares edged up 0.3pc, climbing back near an 8-year peak, but the number of trades fell by a third from the previous session.

The index has now climbed 35.5pc since the central bank ditched the currency peg to the U.S. dollar on Nov 3 and faces strong technical resistance at its record 2008 peak of 12,039 points.