Saudi Arabia’s benchmark stock index, the Arab world’s biggest, rose from a 10-month low on bets selling this month prompted by concern about the king’s health was overdone given the country’s economic prospects.
Saudi Basic Industries Corp. (SABIC), the world’s largest petrochemical maker known as Sabic, gained 0.9 percent. Food producer Savola Group rose the most since Oct. 17. The Tadawul All-Share Index (SASEIDX) climbed 0.4 percent to 6,547.19 at the close in Riyadh after earlier tumbling as much as 1.5 percent. The gain was the second in 13 trading days.
Today’s advance trimmed the index’s decline this month to 3.6 percent, selling triggered in part by concern about the king’s health after he underwent back surgery. The drops didn’t reflect “the fundamentals of the country and in particular of the banks and consumer companies,” said Oliver Bell, who manages $312 million in Africa & Middle East Funds at T. Rowe Price. The fund is “buying into this weakness,” he said.
King Abdullah’s surgery was successful, the government said this month. The largest Arab economy is set to grow 5.1 percent in 2012, the second-fastest pace in the Gulf Cooperation Council after Qatar, according to the median forecast of 15 economists compiled by Bloomberg.
Mohammed bin Nayef was appointed as Saudi Arabia’s interior minister earlier this month, bringing into focus a younger generation of Saudi royalty as the monarch lines up his potential successors. Mohammed’s father, Crown Prince Nayef bin Abdulaziz, was interior minister for three decades until his death in June.
“The succession, when it happens, will be a lot smoother than many expect,” Bell said.
The Saudi gauge’s 14-day relative strength index rose to 31 today after falling to 28 yesterday. A reading below 30 indicates to some analysts that an index is poised to gain.
Sabic increased the most since Nov. 6 to 87.75 riyals. Savola (SAVOLA) advanced 2.5 percent to 40.3 riyals.
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