JEDDAH/DUBAI: Gulf Arab bourses closed higher on Sunday despite last week’s decline in global markets, gaining momentum from a rise in Saudi banking stocks.
The Saudi banking sector, led by Samba Financial Group, has been rising because of a Credit Suisse upgrade of six banks and the news that Saad Group has agreed a debt agreement with the local banks.
As a result of the deal, Saudi banks “could be able to reverse some of the provisioning they had taken during the past quarter, hence strengthening their asset quality and boosting their bottom line,” Shuaa Capital analysts said.
But Shuaa warned that “a single-sided settlement that excludes international and GCC ex-Saudi creditors could engage the Saudi Banking sector as a whole in a worthiness dispute which would affect its long term rating.”
Saudi Arabian stocks, which posted a 3.1 percent gains on Saturday, clocked up 0.8 percent on Sunday. The Tadawul All-Share Index (TASI) increased by 0.77 percent to close at 6,178.14 points. The stock market turnover was over SR4.70 billion on Sunday. Samba closed 9.4 percent higher, while Al-Rajhi Bank lost 2 percent. “The momentum of gains seems to have slowed down, however, with the gains being overdue, the market is taking it’s time to adjust its current overbought status. A high level on investor confidence and participation will be essential in maintaining the positive position the market seems to have taken, however, a certain degree of profit-taking is to be expected eventually, especially following seven consecutive days of gains, the Jeddah-based Financial Transaction House (FTH) said in its daily market commentary.
Dubai’s and Abu Dhabi’s bourses, partly helped by banking stocks, ended 0.6 percent and 0.2 percent higher respectively.
The Dubai index climbed 0.6 percent to 2,197 points. The main measure in Abu Dhabi gained 0.2 percent to 3,124 points.
Oman’s market outperformed regional peers, also receiving a boost from banks. Investors are already anticipating the third-quarter results for banks, which should be positive, says Shailendra Singh, investment manager at Al-Shurooq Securities.
“Costs have gone up for the banks, but we believe that is already priced in,” he says.
The Oman stock index rose 1.3 points to 6,737 points. Kuwait’s benchmark gained 1.3 percent to 7,897 points.
“I think overall market participants have positive view on the (Gulf) markets, especially with regards to catching up with other emerging markets,” said Abdul-Muhsen Al-Hamad, investment manager at Noor Financial Investment Co.
“Investors are betting that GCC markets are the next to invest in.”
Going forward, local markets will look again at international markets for direction, Shurooq’s Singh said.
— With input from agencies