Saudi stocks gain as oil prices steady

Saudi stocks gain as oil prices steady

2643
0
SHARE

JEDDAH  — A recovery in oil prices coupled with the central bank’s move to ease banking sector liquidity this week helped lift Saudi Arabia’s stock on Tuesday, while stronger global bourses encouraged buying in Egyptian shares.

Stock benchmark Tadawul All Share Index gained 0.86% to close the day at 5,739.98 points. It posted a second day of gains in a broad-based rally as investors bought back stocks after the central bank lifted local banks’ maximum loan-deposit ratio to 90 percent from 85 percent.

The index came off its highs after Qatar, Saudi Arabia, Russia and Venezuela agreed on Tuesday to freeze their oil output at January levels providing other major producers followed suit. Oil prices rose in anticipation of the announcement and fell back slightly afterwards.

Saudi Basic Industries (SABIC), the largest petrochemical producer, was up 3.0 percent.

The banking sector, which helped lift the main index 2.4 percent on Monday, added a further 1.1 percent.

Dar Al Arkan fell 1.1 percent after the real estate developer downgraded its credit rating to B1 with negative outlook from VA3 with stable outlook. Rehan Akbar, a Moody’s assistant vice-president, said in a statement: “The rating downgrade and negative outlook reflect our view of the interlinkages between the weakening operating and macroeconomic environment that could continue to negatively impact Dar Al Arkan.”

Egypt’s main benchmark was up 1.5 percent with Orascom Telecom (OTMT), the most traded stock, adding 3.6 percent after gaining 3.7 percent on Monday.

Beltone Financial soared 9.9 percent, heading for a fourth straight trading day of strong gains. The financial firm is advising on 10 mergers and acquisitions this year worth over 60 billion Egyptian pounds ($7.66 billion), its managing director said on Monday, as investors seek pockets of opportunity amid economic gloom.

But the chronic dollar shortage in Cairo, which has underpinned foreign investors’ capital flight from the Egyptian stock market for several months, has not improved.

The Egyptian pound weakened to 9 against the dollar on the black market for the first time ever on Monday from 8.85 a day earlier, as people rushed to buy the US currency, two traders told Reuters.

Wall Street was set to open higher on Tuesday, extending a rally from Friday after an extended weekend, as cautious investors looked for bargains among beaten-down stocks and as oil prices stabilized.

Brent crude oil prices hit a 12-day high after four of the world’s largest producers agreed to freeze output, but quickly gave up those gains to trade flat as investors had hoped for an outright cut in supplies.

US crude was around $30 per barrel and Brent at about $33. “We are looking at a rally at the open helped by the recovery in oil prices,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

“The freeze in output is the first step toward agreeing to formal cuts and I expect to see cuts by the end of the quarter.”

Slumping oil prices, fears of a China-led slowdown in the global economy, uncertainty over the central banks’ monetary policies and unflattering U.S. corporate reports have roiled the markets this year.

The S&P 500 is down more than 8 percent since the beginning of the year, led mainly by financial and commodities-related stocks.

Banks again gained on Tuesday after the S&P financial index posted its largest daily percentage gain since November 2011 on Friday.

NO COMMENTS

LEAVE A REPLY