- Volume of trading was 43 percent higher than 20-day average
- Petrochemicals gauge increased 2.5 percent, led by Sabic
Saudi Arabian stocks rose the most in more than four months on investor optimism that officials from the kingdom and Russia will cooperate to shore up oil prices.
The Tadawul All Share Index added 1.7 percent, the steepest gain since April 25, according to data compiled by Bloomberg. Trading volumes also increased, with about 228 million shares changing hands on the gauge, 43 percent above the 20-day average. Saudi Basic Industries Corp. was the biggest contributor to the rally, adding 2.7 percent.
While talks in China between Russian and Saudi Arabian energy ministers fell short of a freeze on output, causing oil to pare its gains on Monday, the two addressed the press at a rare joint press conference. Russian Energy Minister Alexander Novak said the two countries have a “number of tools” at their disposal for joint actions. Oil revenue drives most government spending in Saudi Arabia, which is struggling to plug a widening deficit following Brent crude’s more than 50 percent drop in the past two years.
“Having a meeting is a milestone, regardless of the outcome,” said Tariq Qaqish, the Dubai-based head of asset management at Al Mal Capital PSC. “The advance of talks between Saudi Arabia and Russia is positive news for oil exporting countries. Higher oil prices will enhance investor sentiment, therefore we expect to see the equity market follow.”
The Tadawul All Share Petrochemical Industries Index climbed 2.5 percent, the most since May. The gains in the kingdom helped spur Bloomberg’s GCC 200 Index, a measure of the biggest and most liquid companies in the six-nation Gulf Cooperation Council, to a 0.8 percent increase, the steepest gain since July 13.
Saudi Energy Minister Khalid Al-Falih, who sees no immediate need to limit oil production to stabilize the market, is optimistic of an agreement when members of the Organization of Petroleum Exporting Countries and other major producers meet in Algeria this month. Until an accord is announced, there may be some volatility in the short term, said Qaqish.
Brent crude traded 1.4 percent higher at 1:04 p.m. in London at $47.46 per barrel, after earlier rising as much as 5.5 percent.