Bank gains, Q4 earning hopes boost Saudi stocks

Saudi shares ended higher yesterday, lifted by gains in the petrochemical and banking sectors.
The benchmark stock index rose to the highest in more than three months while investors await domestic fourth-quarter earnings.
“There is a feeling of optimism in the local market at the kickoff of 2013, driven mainly by the promising budget,” said Basil Al-Ghalayini, CEO OF BMG Financial Group.
Saudi Basic Industries Corp. (SABIC) advanced to the highest since Dec. 22. SABIC rose 0.8pc to SR 92.25.
The banking index also gained 0.7 percent as Al-Rajhi Bank added 1.1 percent to SR 67.5.
Tamer El Zayat, senior economist at the National Commercial Bank (NCB), said: “Momentum buying is still going strong based on increased budget allocations across the board to all sectors of the economy and the expected profitability and dividends growth.”
He said Saudi banks are expected to record double-digit growth on the back of loan growth and non-interest income while the petrochemical sector is benefiting from higher oil prices.
The Tadawul All-Share Index surged 1 percent to 7,010 points yesterday. That’s the highest since Sept. 22, according to data compiled by Bloomberg.
Analysts said the index rose after fresh US jobs data boosted global markets.
The S&P 500 (SPX) rose to the highest since December 2007 yesterday, gaining after a US Labor Department report showed 155,000 jobs were added last month.
Asim Bukhtiar, vice president/head of research at Riyad Capital, said the Saudi market reacted to positive jobs numbers out of the US and the S&P hitting its five-year high.
“Domestically, investors are taking positions ahead of the results announcements as Q4 earnings season kicks off this week,” said Bukhtiar.
Tadawul’s real estate development index rose 2.30 percent yesterday. Telecom index up 2.35 percent and Media and publishing 2.38 percent.
Etihad Etisalat Co. (Mobily) increased to the highest level in six years. Etihad Etisalat climbed 2.3pc to SR78.5.
Jarmo T Kotilaine, a regional analyst, said: “Clearly the beginning of the year has been marked by some important positive developments. Domestically, the budget underscores the authorities’ commitment to fiscal expansion.”
Kotilaine added: “Internationally, the step off the edge of the fiscal cliff removes a major source of near-term uncertainty. Perhaps more generally it underscores the reluctance of policy makers in the Wesy to make tough choices, which translates into a fairly permissive (albeit potentially unsustainable) fiscal policy and extremely loose monetary policy. This may not be good for growth but it reduces the risk of major disruptions and supports asset and commodity prices relative to where they might otherwise be. Also better data from China has been encouraging the markets.”