May 12 (Bloomberg) -- Saudi Arabia’s shares rose, rebounding from a two-month low, on bets a decline prompted by concern that Europe’s debt crisis will worsen was overdone given growth prospects in the Arab world’s largest economy.
Almarai Co., the kingdom’s biggest food producer, led the gain with an advance of 2.6 percent. Nama Chemicals Co., a petrochemicals company, gained the most in almost a month. The Tadawul All Share Index rose 0.2 percent to 7,233.20 at the 3:30 p.m. close in Riyadh, following a 2 percent decline on May 9, the last working day. The gauge earlier slumped as much as 2.6 percent.
“Investors looked at some buying opportunities as some stocks have been oversold,” said Asim Bukhtiar, an equity analyst at Riyad Capital. “Fundamentals are still strong. Earlier in the session there was some overreaction to the Europe factor.”
The Tadawul has jumped 13 percent in 2012, making it the best-performing stock market in the Persian Gulf, boosted by higher oil prices and speculation that the world’s biggest crude exporter will remove restrictions on foreign investors.
Saudi stocks slumped 4.3 percent last week as an inconclusive election in Greece left political parties struggling to form a government, reigniting concern over the European debt crisis. The weekly drop was the worst since August. The measure’s 14-day relative strength index dropped to 31 on May 9 and reached 32 today. A reading below 30 indicates to some investors that the shares are poised to advance.
Saudi Arabia, home to 28 million people, is the Gulf Cooperation Council’s biggest country by population and economic output. The economy may expand more than 6 percent this year, Finance Minister Ibrahim Al-Assaf said in January. It grew 6.8 percent in 2011.
Almarai gained the most since April 28 to 68.5 riyals. Nama surged 9.8 percent, the most since April 17, to 20.2 riyals.
Saudi Arabia’s stock exchange is the only Gulf Arab bourse that is open on Saturdays.
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