Saudi Arabian Equities Jump Most in More Than Five Months; Sabic Advances

Saudi Arabian shares jumped the most in more than five months amid high volumes as climbing oil prices boosted confidence in the Arab world’s largest economy.

The Tadawul All Share Index (SASEIDX) rose 1.4 percent, its biggest gain since Sept. 17, to 7,481.27 at the 3:30 p.m. close in Riyadh with 551 million shares traded, compared with a six-month daily average of 290 million. Saudi Basic Industries Corp. (SABIC), the world’s largest petrochemicals maker, advanced to its strongest level in more than seven months. The 152-member index rallied 1.4 percent last week, capping a 7-week winning streak, the longest since January last year.

U.S. stocks rose yesterday, capping the fourth straight weekly rally for the Standard & Poor’s 500 Index, and oil climbed for a third day, after a government report showing stronger-than-forecast payroll growth bolstered optimism in the world’s largest economy. Crude also advanced as Greece pushed through the biggest sovereign restructuring in history. Saudi Arabia relied on oil exports for 93 percent of revenue in 2011.

“Gulf Cooperation Council equities have emerged as an attractive investment option which would explain rising volumes and sustained strength, particularly on the Saudi market,” said Asim Bukhtiar, head of research at Riyad Capital. “High net- worth individuals may be repatriating funds back to regional markets as attractive investment opportunities dry-up in developed markets.”

The Saudi gauge has gained 17 percent this year compared with a 16 percent increase for the MSCI Emerging Markets Index. (MXEF) The MSCI All-Country World Index (MXWD) has added 10.1 percent in the period, while the Dow Jones Industrial Average (INDU) rose 5.8 percent.

Capital Adequacy

Al Rajhi Bank (RJHI), Saudi Arabia’s biggest publicly traded lender by assets, added 1.3 percent, the strongest increase since March 3, to 77.75 riyals.

Saudi Arabia’s Capital Market Authority said in a statement today that an assessment of securities companies showed the industry’s capital adequacy ratio rose to 35 percent at the end of last year, compared with the 13 percent ratio required by Basel III.

Saudi Basic Industries, or Sabic, which has the heaviest weighting in the index, gained 3 percent to 104.75 riyals, the highest level since Aug. 1. Oil rose for a third day in New York yesterday, increasing 0.8 percent to $107.40 a barrel.

Dar Al Arkan Real Estate Development Co. (ALARKAN) dropped 0.5 percent, the biggest decline this month, to 10.10 riyals. Saudi Arabia’s second-biggest property company by market value had its credit rating downgraded to B+ from BB- and was placed on negative watch by Standard & Poor’s.

Saudi Arabia’s stock exchange is the only Gulf Arab bourse that opens 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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