The Saudi building and construction index rose to a
three-month high on Tuesday and although it quickly retreated from that peak,
it resumed rising on Wednesday in heavy turnover. It is up 5.7 percent so far
in December.
Construction firm Mohammad Al-Mojil has jumped 17.9
percent during the month, steel pipe maker SSP has climbed 5.2 percent and
Saudi Ceramics, which makes porcelain tiles for buildings, has gained 4.4
percent.
"The demand for this sector is expected to
increase," said Assad Jawhan, a Saudi-based economist. "That's why
investors with a long-term view are buying in. This is a promising
sector."
The building sector is seeing the initial benefit of new
spending announced by Custodian of the Two Holy Mosques King Abdullah in March.
This includes SR250 billion ($67 billion) worth of spending to build 500,000
housing units over several years.
The government has said it will overspend its budget by
up to 15 percent this year because of construction and job-creation measures,
and more such allocations are expected when the 2012 budget is released
sometime in the next few weeks.
"Companies that benefit from construction,
infrastructure, are names that have done well in the last two weeks in relation
to the Saudi budget that is expected to be out soon," said Farouk Miah,
acting head of research at NCB Capital.
Another potential positive for the stock market is the
surprise appointment on Tuesday of Fahd bin Abdullah Al-Mubarak, formerly
managing director of Morgan Stanley Saudi Arabia and a former chairman of the
Saudi stock market, as governor of the central bank.
Putting a top financial market figure in charge of the
central bank suggests to many that Riyadh wants to develop the financial
industry, and may well move ahead early next year with proposals to open the
stock market to foreign investment.
The main Saudi market index rose 0.8 percent on Wednesday
after the news on the central bank, substantially outperforming all Gulf stock
markets except Oman.
Egypt's stock market may benefit next week from positive
sentiment towards the second round of the country's parliamentary elections and
a sense that security may be returning to the streets, analysts and traders
said.
"The market should be flat with a tendency to go
slightly up," said Osama Mourad of Arab Finance Brokerage.
Investors have largely priced in the latest negative news
about the large budget deficit and the rapid draw-down of the country's foreign
reserves, so an improving security and political environment could clear the
way for a modest rally in thin turnover.
Egyptians have complained of a spate of carjackings and
muggings since police mostly withdrew from the streets during the uprising
against Hosni Mubarak in February. Police returned in force only this week
under instructions from newly appointed Prime Minister Kamal Ganzouri.
"We have seen a police presence in major cities,
with police capturing some of the people who have been attacking and
stealing," Mourad said.
The benchmark index jumped after the first round of
parliamentary voting passed without violence in late November, so analysts
think it will also benefit if voting in this week's second round goes smoothly.
The release by the central bank of Egypt's balance of
payments numbers for the July-September quarter, which is expected in the next
several days, may affect the market given concern about the weakness of the
Egyptian pound.
