Banking shares help key Saudi index edge up 0.2 percent

Saudi Arabia’s Tadawul All-Share Index extended gains from the previous session to close 0.2 percent up. Al-Rajhi Bank gained 0.7 percent. (Reuters)
Updated 23 October 2019

Banking shares help key Saudi index edge up 0.2 percent

  • Property shares weigh on Egypt; other Gulf markets mixed

Most Gulf stock markets moved marginally amid falling oil prices on Wednesday, while Egypt’s blue-chip index declined, led by property shares.

DUBAI: Oil prices slipped toward $59 a barrel on data showing a bigger-than-expected rise in US crude stocks, while the prospect of deeper output cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies offered support.

Saudi Arabia’s index extended gains from the previous session to close 0.2 percent up. Al-Rajhi Bank gained 0.7 percent, while Alinma Bank rose a further 1.3 percent.     

On Tuesday, Alinma reported a rise in third-quarter profit to SR713 million ($190.10 million) compared to 637 million a year earlier.    

However, gains were capped by losses in petrochemical stocks.

Sahara International Petrochemical (Sipchem) slid 2.8 percent following a more than 38 percent plunge in third-quarter net profit.

The petrochemical maker said it was due to a decrease in selling prices for most of the products.

Egypt’s blue-chip index decreased 0.5 percent, with most stocks on the index falling. Property stock Talaat Mostafa lost 1.7 percent and El-Sewedy Electric was down 1.5 percent. Among other stocks, developer Madinet Nasr also decreased 1.9 percent. 

Egypt’s nonoil private sector contracted for the second consecutive month in September, according to the IHS Markit Egypt Purchasing Managers’ Index (PMI).     

In Dubai, the index closed 0.3 percent down with Emaar Properties shedding 1.1 percent and Dubai Islamic Bank  falling 0.6 percent. 

The Abu Dhabi Index added 0.3 percent, extending gains for a third straight session, with First Abu Dhabi Bank and Aldar Properties gaining 0.4 percent and 1.8 percent respectively. 

Qatar’s index dipped 0.2 percent, extending losses for a fifth straight session, as Qatar Fuel declined 1.6 percent and Mesaieed Petrochemical ended 2.2 percent lower.

But Commercial Bank edged up 0.2 percent after it reported a rise in nine-month profit to QR1.50 billion ($412.09 million) compared to QR1.35 billion a year earlier.


Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

Updated 18 November 2019

Investment and energy experts welcome ‘sensible’ Saudi Aramco IPO valuation

  • Price regarded as a sensible compromise and that it will sell the IPO
  • Experts said the Aramco valuation was justified by the financial metrics

DUBAI: Investment professionals and energy experts delivered a mainly enthusiastic response to the pricing of shares in Saudi Aramco and the overall valuation of the biggest oil company in the world at between $1.6 trillion and $1.7 trillion.

Al Mal Capital, a Dubai-based investment bank, said that it was positive on the Aramco initial public offering (IPO) on that kind of valuation, which it said was justified by the financial metrics.

“We believe Aramco’s IPO is a central pillar of Saudi Arabia’s Vision 2030. In our view, the broader privatization of state assets will likely accelerate the flow of foreign capital into the Kingdom, improve liquidity and transparency as well as continue to help diversify its economy away from its dependency on oil. While many investors were skeptical about the ability of Saudi Arabia to roll out its ambitious agenda, they seem to be right on track.”

Tarek Fadhallah, chief executive officer of Nomura Asset Management in the Middle East, said via Twitter: “My first impression is that the price is a sensible compromise and that it will sell the IPO. Aramco should easily raise the $8.5bn from retail investors but the 29 global coordinators, managers and financial advisers will need to find the other $17 billion. A few billion from China would help.”

Robin Mills, chief executive of the Qamar Energy consultancy, said; “I think it’s a reasonable compromise. The price is well above most independent valuations but well below the aspirational price. It implies dividend yields a bit lower than the super-majors (the independent oil companies), but a similar price earnings ratio (the measure of the share price rated according to profits). Retail and local investors should be sufficient. We’ll have to see about the foreign investors.”

Ellen Wald, energy markets consultant and author of the book Saudi, Inc., said American investor would still be undecided on the IPO. 

“Remember, investors don’t put money in because they think the value is accurate. Smart investors put money in because they think the value will rise. It all depends on whether they see signs the price will rise during their time frame.”

American oil finance expert David Hodson, managing director of BluePearl Management, said: “This valuation seems to be more reasonable based on the fundamentals. Potential investors in Western markets will base their decision on cold hard facts like dividends and growth prospects. From what we now know, Aramco is offering them a compelling investment proposition to consider.”