Buoyant investor sentiment lifts major Saudi stocks

Continues climb on the back of upbeat scenario following mammoth international bond sale

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Major stock markets in the Gulf rose on Sunday with Saudi Arabia outperforming it peers, continuing to climb on the back of upbeat investor sentiment following the mammoth international bond sale at the end of last week. Egypt’s index slipped on profit taking.

Riyadh’s index added a further 1.6 percent, taking its gains since Wednesday to 5.1 percent as a little over 80 percent of the traded shares rose.

Banks continued their climb with Saudi Hollandi Bank gaining 3.4 percent. At the end of last week bank shares rallied after the kingdom conducted a $17.5 billion international bond sale with success.

Investor optimism has been buoyed despite some weak quarterly results. About three-quarters of Saudi’s listed companies have so far reported, with generally lower earnings and a few companies missing analysts’ estimates by a wide margin.

“There has been a string of positive events that have helped revive optimism towards Saudi shares, namely because of the successful bond sale, payment by government to construction sector and relatively supportive oil prices,” said Kunal Damle, head of brokerage institutional sales at SICO Bahrain.

Valuations at current levels will encourage investors further, another factor Damle believes is underlying the market rally over the last two sessions. The banking sub-index is trading at a price-to-earnings of 8 times, according to Thomson Reuters data, a discount to its five year average.

Dar Al Arkan, the most traded stock on Sunday, soared by their 10 percent daily limit after it reported a 21.4 percent rise in third-quarter net profit to 112.5 million riyals ($30.0 million), double the forecast by analysts at NCB Capital.

The company attributed the rise to higher revenues from property sales and lower operating expenses, such as payroll and consultancy fees.

Analysts at NCB Capital said the surprise came from higher than expected land sales of 570 million riyals versus their estimate of 390 million riyals.

Supermarket operator Al Othaim jumped 4.5 percent after the company reported a better than expected third-quarter net income of 36.64 million riyals, higher than NCB Capital’s estimate of 29.3 million riyals.

Analysts at NCB said in a note lower than expected operating expense and higher income from its associate were the key drivers for the earning’s coming ahead of their forecast.

Dubai’s main index added 0.5 percent as the largest listed developer Emaar Properties, which has yet to
publish its third-quarter net income, rose 2.6 percent.

But DXB Entertainments, pared gains and fell 0.6 percent ending its three session of strong gains. Its shares have outperformed over the last several days in anticipation of the opening of its theme park at the end of the month.

Blue chips lent the main support to Abu Dhabi’s index, which added 0.1 percent. Aldar Properties advanced 1.1 percent and National Bank of Abu Dhabi, which announced on Sunday its shareholders and those of First Gulf Bank will both meet on Dec. 7 to approve the merging of the two, climbed 2.3 percent.

Egypt’s index of the 30 most valuable shares dipped 0.04 percent as two-thirds of the stocks declined as some of the best performing shares on Thursday gave back some gains. Orascom Telecom, the most traded share, pulled back 3.6 percent.

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