Saudi Arabia stocks rise, bolstered by stronger oil

JEDDAH -- Saudi Arabia's stock market continued its sharp rebound Sunday as stronger oil prices lifted shares in the petrochemical sector.The kingdom's stock benchmark Tadawul Al Share Index jumped 4.2 percent in the opening minutes and gained 1.13 percent at 7,690.4 points at close with petrochemicals giant Saudi Basic Industries (SABIC) settling at 6.5 percent higher. The petrochemical sector

  
31 August 2015
JEDDAH -- Saudi Arabia's stock market continued its sharp rebound Sunday as stronger oil prices lifted shares in the petrochemical sector.

The kingdom's stock benchmark Tadawul Al Share Index jumped 4.2 percent in the opening minutes and gained 1.13 percent at 7,690.4 points at close with petrochemicals giant Saudi Basic Industries (SABIC) settling at 6.5 percent higher. The petrochemical sector index added 5.7 percent.

Other sectors were also strong although lagging behind petrochemicals, for whom stronger oil translates into higher margins.

National Commercial Bank, Saudi Arabia's largest lender, surged 4.2 percent. "It's an unbelievable rally considering the battering oil took in the past few weeks," said Wadah Al Taha, the Dubai-based chief investment officer of Al Zarooni Group, who favors investing selectively in regional markets over the short term.

"The positive close in international markets, especially with China rallying again and US equities ending the week on a positive note, is also helping sentiment."

Saudi Basic Industries Corporation, one of the world's biggest petrochemicals manufacturers, added 5.8 percent to lead the advance.

"It's an unbelievable rally considering the battering oil took in the past few weeks," said Wadah Al Taha, the Dubai-based chief investment officer of Al Zarooni Group, who favors investing selectively in regional markets over the short term.

"The positive close in international markets, especially with China rallying again and US equities ending the week on a positive note, is also helping sentiment."

The Standard & Poor's 500 Index gained 0.9 percent last week, masking a volatile period in which the US benchmark plunged the most since 2011 to enter a correction, only to rally more than 6 percent over two days. The gauge is down 5.5 percent for the month, the most since May 2012.

Saudi Arabia's benchmark equity index entered a bear market last week, and the DFM General Index recorded daily losses of as much as 7 percent and gains of as much as 4.6 percent in the same period. Brent crude closed below $45 per barrel for the first time in six years on August 24.

"There's no doubt that the main reason for the Saudi market rally is the significant increase in oil prices on Friday," said Riyadh-based Mohammed Al Suwayed, the head of capital and money markets at Adeem Capital.

"I am waiting for the August close on Monday to make sure that there is no retracement in prices, but I'm cautiously optimistic for the rest of the week."

Saudi Arabia's market had suffered the most from panic selling in the Gulf earlier this month and is still down 12.8 percent month-to-date.

Oil prices surged again Friday, a day after recording their biggest gain in more than six years. US crude rose 6.3 percent to finish at $45.22 per barrel after climbing 10.3 percent on Thursday.

That was the biggest one-day jump for US oil since March 2009. The gains ease some concerns about the economic impact of falling oil prices on oil-producing regions and the economy at large.

Brent crude, a benchmark for international oils imported by US refineries, rose 5.2 percent to $50.05 a barrel. Brent also rose 10.3 percent Thursday.

The price of US crude has been trading at six-year lows because of a global supply glut and worries about the health of China's economy.

© The Saudi Gazette 2015