Saudi Shares Reach Eight-Month High, Buoyed by Crude Oil Gains, Earnings

Saudi Arabian shares rose to the highest level in almost eight months, as oil advanced to its highest year-end price since 2007 and investors start the year with expectations companies will post encouraging quarterly earnings.

Al Rajhi Bank, Saudi Arabia’s largest publicly-traded lender by market value, Saudi Arabian Fertilizer Co., a unit of Saudi Basic Industries Corp. known as Safco and Dar Al Arkan Real Estate Development Co. paced the rally. The 146-company Tadawul All Share Index rose 0.5 percent to 6,654.4, the highest since May 12, at the 3:30 p.m. close in Riyadh.

“The price of oil shifted into high gear this past quarter and that has pushed investors to bet big on fattened oil company profits,” said Amro Halwani, a trader at Shuaa Capital PSC in Riyadh. “People are pinning in their hopes on growth in corporate earnings as it is starting to look more and more entrenched.”

Oil for February delivery climbed $1.54, or 1.7 percent, to settle at $91.38 a barrel on the New York Mercantile Exchange yesterday. Prices rose 11.4 percent in the fourth quarter. Oil ended the year above $90 a barrel for only the second time since the contract started trading in 1983, after settling at $95.98 in 2007. Saudi Arabia holds one-fifth of the world’s proven oil reserves.

Al Rajhi rose 1.2 percent to 84 riyals, the highest level since April 26. Safco advanced 2.7 percent to 164 riyals, the highest since Oct. 2008. Dar Al Arkan surged 4.4 percent, the most since June 2009, to 9.4 riyals. Sabic was unchanged at 104.75 riyals.

“Urea prices have shot up globally and with Safco being on the front line to benefit, its shares are substantially on demand,” Halwani said. “The owner’s embargo period on Dar Al Arkan has expired, and that’s making the stock more attractive for hot money.”

Arabian Pipes surged 9.9 percent, the maximum fluctuation allowed in a single trading session, to 30 riyals, the highest since July 11, after the Saudi maker of steel pipes won a 315 million-riyal ($84 million) contract from GS Engineering & Construction Corp. and owned 100 percent of Arabian Yadong for Packaging Co. Ltd.

Saudi Arabia’s stock exchange is the only Gulf Arab bourse open on Saturdays.

To contact the reporter on this story: Mourad Haroutunian in Riyadh at mharoutunian@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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