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Al-Rajhi Bank, Maaden boost Saudi stocks

International index compiler FTSE is due to decide next month whether to upgrade Saudi Arabia to secondary emerging market status, which could bring billion of dollars of fresh passive and active fund inflows. (Reuters)
DUBAI: The Tadawul All Share Index (TASI) rose on Tuesday on the back of gains by Al-Rajhi Bank and mining firm Maaden, while Dubai also outperformed most Gulf bourses although trading was thin.
The Tadawul index climbed 0.4 percent with Al-Rajhi up 2.2 percent to SR65.80 ($17.55), bringing its gains over the last five days to 4.9 percent. Of 14 analysts covering the stock, seven rate it a “buy” or “strong buy” and six rate it a “hold,” according to Thomson Reuters data; their median target price is SR70.90.
Maaden rose 1.8 percent after international base metal prices surged to multi-year highs overnight.
Maather REIT Fund jumped its 10 percent daily limit from its initial public offer (IPO) price to SR11 upon listing in Riyadh to become Saudi Arabia’s fifth listed REIT (real estate investment trust).
Its subscription in the IPO had been covered 15.2 times and analysts at NCB Capital had estimated that based on its subscription price of SR10 per share, its dividend yield for 2017 would be 7.2 percent.
Three other REITs were among the 10 most actively traded stocks and swung widely, although they closed lower. Al-Jazira Mawten REIT fell 2.2 percent.
International index compiler FTSE is due to decide toward the end of September whether to upgrade Saudi Arabia and Kuwait to secondary emerging market status, which could bring them billion of dollars of fresh passive and active fund inflows.
Some investors have begun positioning for the decisions, and Arqaam Capital said in a report on Tuesday that positive decisions appeared likely in both cases, although actual inclusion would probably only occur in two phases in September 2018 and March 2019.
However, Tarek Fadlallah, chief executive of Nomura Asset Management Middle East, wrote in a report that macroeconomic indicators suggested a subdued outlook for Gulf Cooperation Council (GCC) countries, and that while profits at listed regional companies had stabilized, valuations were not particularly cheap against international peers or their own historical averages.
“Investors may take a wait and see attitude as they evaluate the path and consequences of economic reform,” he wrote of GCC bourses.
Dubai’s index rose 0.5 percent as blue chip Emaar Properties added 0.6 percent, but only six of the 10 most heavily traded stocks rose.
Abu Dhabi stocks fell 0.5 percent as Dana Gas, which had soared 8.1 percent on Monday after reporting a sharp rise in second-quarter net profit last week, pulled back 4.5 percent.
Qatar’s index was flat as trading volume rose slightly from Monday’s level, which was the lowest this year. Investment Holding Group, which plunged after listing last week following an IPO at SR10 per share, rebounded 2.7 percent to SR7.72.
In Egypt, the index edged up 0.1 percent. GB Auto climbed 3.9 percent.

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