Saudi Arabia Leads Gulf Stock Gains on Eve of Post-Oil Vision

  • Tadawul extends gain after entering bull market on Thursday
  • Kingdom set to announce its post-oil vision on Monday

Saudi Arabian stocks led an advance across most Gulf Arab equities as the kingdom prepared to announce a road map for the post-oil era.

The Tadawul All Share Index added 1.7 percent, the most in more than a month and extending gains after it entered a so-called bull market on Thursday. The kingdom is scheduled to set out a comprehensive plan on Monday to diversify its economy and shore up government finances after a collapse in oil prices. The Bloomberg GCC 200 Index, which tracks the region’s largest and most liquid stocks, rose 0.6 percent.

The “Vision for the Kingdom of Saudi Arabia” will encompass several developmental, economic, social and other programs, the country’s deputy crown prince told Bloomberg this month. Stocks in the Arab world’s biggest economy, which have the highest correlation to oil prices among gauges in the six-nation Gulf Cooperation Council, have been whipsawed as crude plunged this year to the lowest level in more than a decade.

“The key piece of news will be the announcement out of Saudi Arabia tomorrow on its transformation plan,” said Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi. “Investors, including us, are on the sidelines until we know what their plan is. We don’t know what the impact of the announcement will be on markets, so investors are in wait-and-see mode.”

The rally in Saudi Arabian stocks has driven valuations to the highest in eight months. Companies on the gauge are trading at about 13 times expected earnings, compared with about 12 times for those on MSCI Inc.’s emerging-markets measure.

Du Rally

Dubai’s DFM General Index was little changed as about 239 million shares traded, 47 percent below the 20-day average. Emirates Integrated Telecommunications Co. increased 2.1 percent. The company known as Du has gained 9.1 percent in the past five days as trading volumes spiked. 

“Speculation that the company may adjust its foreign ownership limits is driving Du higher,” said Sanyalak Manibhandu, the Abu Dhabi-based head of research at NBAD Securities LLC, who has a reduce rating on the stock. His price target is 6 dirhams, 10 percent below Sunday’s level. “Even if the company does change its ownership structure, it might be too late for it to be included in MSCI’s next review.”

Abu Dhabi’s ADX General Index fell 0.3 percent. Oman’s MSM 30 Index climbed 1.3 percent, led by HSBC Bank Oman, which rallied 8 percent. Bank Dhofar rose 2 percent. The lender has communicated to Bank Sohar the terms on which it is willing to proceed with a merger, according to a filing on Muscat’s exchange Sunday. Bank Sohar was unchanged.

Qatari Banks

Kuwait’s SE Price Index gained 0.5 percent. Human Soft Holding Co., a training company, advanced for a sixth day, adding 6.9 percent to the highest in more than a month. That brings the increase in the period to 39 percent.

Qatar’s QE Index slipped 1.3 percent, dropping the first time in five days on trading volumes about 35 percent below the 20-day average. Seventeen of 20 shares retreated. Fitch Ratings on Thursday affirmed the credit rating of seven of the country’s lenders, and Qatar National Bank was one of only two advancers. Meanwhile Qatar First Bank will sell shares on the bourse on April 27, according to a stock exchange statement on Thursday.

Israel Climbs

Almost two shares rose for every one that declined in Israel’s TA-25 Index, which was little changed after a second consecutive week of gains. Opko Health Inc. led advancers.

Israel Corp. increased for a third day, adding 1.2 percent to 783.1 shekels, the highest level since December. Bank Leumi Le-Israel Ltd., the country’s second-biggest lender, said it sold a remaining 5.86 percent stake in Israel Corp. in exchange for a 1.4 percent holding in Israel Chemicals Ltd.

Perrigo Co. dropped 4.4 percent to the lowest level since May 2014 amid reports the drugmaker’s Chief Executive Officer Joseph Papa is in talks to join Valeant Pharmaceuticals International Inc.

Israeli trading hours will be reduced all week because of a religious holiday, and the bourse will close Thursday.

Egypt Cash

Egypt’s EGX 30 Index retreated 0.5 percent, dropping a third day. The decline comes despite Friday’s announcement by the United Arab Emirates that it will provide the North African nation with $4 billion in aid, half in investments and the other in the form of a deposit with the central bank to boost its foreign reserves.

The Egyptian pound has slumped in black market trading this month amid a worsening shortage of hard currency, falling to a record 11.47 per dollar as of April 20. That compares with an official exchange rate of 8.88.

The losses also come on the eve of planned protests called for by more than a dozen political parties and 150 public figures against President Abdel-Fattah El-Sisi’s decision to transfer the sovereignty of two Red Sea islands to Saudi Arabia.

“A $2 billion deposit is relatively inconsequential to the market now because it doesn’t solve the problem,” said Sherif Shebl, an equities trader at Cairo-based Pharos Holding. “The shortage of dollars is still there and we don’t see a long-term plan to alleviate it. Some investors may also be keeping an eye on planned anti-government protests for tomorrow.”

Before it's here, it's on the Bloomberg Terminal.