Saudi Shares Rise Most in 3 Weeks on U.S. Budget Deal

(Corrects to include Oman trading in final paragraph of story first published yesterday.)

Saudi Arabian shares rose the most in three weeks after the U.S. Senate passed a bipartisan budget deal to prevent the potential economic harm from tax increases and spending cuts.

Al Rajhi Bank, the kingdom’s largest by market value, rose the most in two weeks. Saudi Arabian Fertilizer Co. (SAFCO) climbed to the highest level in a week.

The Tadawul All Share Index (SASEIDX) gained 0.6 percent to 6839.53 at 1:03 p.m. in Riyadh. The Arab world’s biggest stock exchange gained 7.2 percent last year, compared with the Dubai Financial Market’s gain of 20 percent.

The U.S. Senate reached an after-deadline deal to undo the $600 billion in tax increases and spending cuts that may have slowed economic growth in the world’s biggest economy. The vote early today in Washington shifts the pressure to House Speaker John Boehner, who hasn’t said if he’ll accept the agreement or change it. He will face difficulty mustering Republican votes for any bill with higher taxes for 2013 than they were in 2012.

“The Saudi market now reacted positively to the news about the new agreement reached, even though it isn’t final,” said Mohammed Al-Omran, financial analyst and president of the Gulf Center for Financial Consultancy in Riyadh. “We don’t know the reaction of the House. If it rejects the agreement, capital markets will go back to square number one.”

Export Demand

U.S. stocks surged on the last day of the year by the most since 1974 before the Senate reached the deal. The S&P 500 rallied 1.7 percent to 1,426.19 in New York. The benchmark index finished the year with a 13 percent gain, its best annual performance since 2009.

Saudi Arabia, whose $727 billion economy expanded 6.8 percent in 2012, is the biggest oil exporter in the world. The economy, which derives about 90 percent of revenue from oil sales, has a “sensitivity to the international economy that is a little bit high,” Al-Omran said.

“The news is positive because of the size of U.S. demand for exports from the region,” Turki Fadaak, head of research and consultancy at Albilad Investment Company, said in an e- mail. “Petrochemical companies should benefit from the news.”

Al Rajhi Bank (RJHI) gained 1.2 percent to 65.75 riyals, while Saudi Arabian Fertilizer climbed 1.5 percent to 154.5 riyals.

Saudi Arabia and Oman are the only stock markets trading in the Persian Gulf today.

To contact the reporter on this story: Glen Carey in Riyadh at gcarey8@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

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