Saudi Stocks Climb Most in Gulf as Investors Bet on Oil Freeze

Updated on
  • Kingdom easing foreign investor rules in bid to lure cash
  • Stocks in Dubai, Muscat and Doha also start week with gains

Saudi Arabian stocks led advances across most Gulf markets as investors speculated companies in the kingdom stand to benefit if oil-producing nations agree an output freeze.

The Tadawul All Share Index added 1.3 percent to 6,099.03 on Sunday, with Al Rajhi Bank contributing the most to the gain. Bloomberg’s index of the largest and most liquid companies in the six-nation Gulf Cooperation Council climbed for the first time in three days.

Shares in the region’s biggest equity market rose in anticipation that Russia and OPEC may agree an oil output freeze at a meeting later this month. The gains come as Saudi Arabia, the world’s largest crude exporter, relaxed rules for foreign investors in a bid to lure overseas cash, one of a number of steps to break the kingdom’s dependence on oil.

To watch a video on the impact of a potential output freeze, click here.

“As speculation about an eventual oil output freeze grows, investors are increasing their bet that Saudi stocks will be able to recover,” said Mohammed Alsuwayed, the head of capital and money markets at Adeem Capital in Riyadh. “The change in regulation is a step necessary to attract foreigners, but there still is a lot of skepticism about inflows coming. Gains we see today can be very short lived.”

Worst Performance

The Tadawul has dropped 12 percent this year, the worst performance in the GCC. Companies on the index are recovering after falling last month to their cheapest versus emerging-market peers in over five years, according to expected earnings.

Just seven of the 174 companies in the Saudi benchmark index declined on Sunday as about half the six-month average number of shares traded, according to data compiled by Bloomberg. Al Rajhi added 1.4 percent as Samba Financial Group rose 4.8 percent. Real-estate company Jabal Omar Development Co. and Banque Saudi Fransi were the next-biggest contributors to the advance, gaining 2.1 percent and 3 percent respectively.

From Sunday, foreign funds with at least $1 billion will be allowed to invest in Saudi stocks, down from the previous threshold of $5 billion. Beginning next year, qualified foreign investors will be able to take part in IPOs. Individual foreign investors will be permitted to double the limit of their stock purchases, while sovereign wealth funds and university endowments will be allowed access to the local market for the first time.

For a guide to this week’s rule changes on the Tadawul, click here.

Dubai’s DFM General Index climbed 0.7 percent. Oman’s MSM30 Index advanced 0.2 percent, Qatar’s QE Index increased 0.1 percent and Bloomberg’s GCC 200 gained 0.5 percent. Kuwait’s SE Price Index fell 0.3 percent and Abu Dhabi’s ADX General Index lost 0.2 percent

Egypt’s EGX 30 Index rose 1.3 percent to the highest level since Aug. 22. Commercial International Bank Egypt SAE was the biggest contributor to the increase, climbing 1.5 percent.

Space Plunge

Israel’s TA-25 Index fell 0.1 percent, extending declines after dropping for a second consecutive week, the longest weekly losing streak since June. The benchmark gauge has fallen 5.6 percent this year.

Satellite operator Space Communication Ltd. slumped 33 percent to the lowest level since September 2006. The company’s communications satellite was destroyed when the SpaceX Falcon 9 rocket blew up on Thursday during pre-launch tests at Cape Canaveral in Florida.

The shekel appreciated for a third day on Friday to 3.7642 per dollar, the strongest level since Aug. 25.