Saudi cement shares surge on eve of 2018 state budget

Reuters

Saudi Arabia’s stock market surged on Monday as cement firms climbed before the release of the government’s 2018 budget, which is expected to include an increase in infrastructure spending. The Saudi stock index surged 1.4 percent in active trade. Five of the 10 most heavily traded shares and six of the 10 top gainers were cement firms, with Najran Cement jumping 6.0 percent.
Analysts generally expect a moderate increase in spending in the 2018 budget and for deficit-cutting to slow considerably as the government focusses more on supporting growth; infrastructure spending may rise after two years of austerity.
This looks unlikely to produce a strong economic recovery next year, given the introduction of 5 percent value-added tax at the start of next month and the government’s plan to announce fuel price hikes in the first quarter of 2018. Although King Salman last week approved 72 billion riyals ($19.2 billion) worth of measures to stimulate growth in the private sector, only 24 billion riyals of that is to be spent in 2018, a Saudi official said.
Nevertheless, the construction industry could start to recover; accelerating housing construction is one of the government’s priorities. Shaker, which as an air conditioner and appliance distributor could benefit from faster home building, rose 1.4 percent
on Monday.
In Dubai, the index was flat in very quiet trade. Abu Dhabi climbed 1.1 percent as ADNOC Distribution , which listed after an initial public offer of shares at 2.50 dirhams, was the most heavily traded stock and climbed 2.6 percent to 2.74 dirhams.
Egypt’s blue-chip index was almost flat. Alexandria Mineral Oils climbed 5.5 percent after saying its profit for the latest quarter jumped more than fourfold from a year earlier.
Egypt Gas Co, which handles natural gas engineering and maintenance work, soared 10 percent, rising sharply for a third straight day.