Saudi stocks lead Gulf advance as foreigners get access to IPOs

Bloomberg

Saudi Arabian stocks joined gains across most Gulf equities after the kingdom said it would let foreign investors take part in initial public offerings, boosting overseas access to the Middle East’s largest exchange.
The Tadawul All Share Index added 0.2 percent at 1:23 p.m. local time, its second straight advance. Abu Dhabi’s ADX General Index rose less than 0.1 percent and Bahrain’s BB All Share Index climbed 0.7 percent. The Bloomberg GCC 200 Index, a gauge of the largest and most liquid companies in the six-nation Gulf Cooperation Council, increased 0.1 percent.
Saudi Arabia’s Capital Market Authority approved regulations on book-building in IPOs that include qualified foreign investors, according to a statement posted on the regulator’s website after the end of trading on Thursday. The kingdom is adopting a series of measures to increase international participation in one of the world’s most restricted exchanges following a halving of oil prices in the past two years.
“News from Thursday shows that the market will be a lot more open for international investors, and with oil prices up, it’s creating some positive sentiment,” said Muhammad Faisal Potrik, the Riyadh-based head of research at Riyad Capital. “Overall, stock prices are pretty attractive at these levels, especially banks, and I think that’s why people are investing right now.”
Brent crude capped its strongest weekly increase in five months on Friday, as investors weighed speculation that OPEC talks next month will lead to an output freeze. It has climbed more than 20 percent since it dipped below $40 a barrel earlier in the month, meeting the common definition of a bull market.
Saudi Valuations
Saudi equities are trading at about 12.3 times expected earnings, according to data compiled by Bloomberg. That’s near the lowest valuation in four months, down from more than 16 times in June 2015. In addition to the IPO rules, which take effect from Jan. 1, regulations coming into force next month cut the amount of assets foreigners must have under management to invest directly in the nation’s stocks to 3.75 billion riyals ($1 billion) from 18.75 billion riyals.
Insurance company Wataniya Insurance Co. was the biggest gainer on a percentage basis on Sunday, climbing 9.7 percent. Saudi Basic Industries Corp., one of the world’s biggest petrochemicals manufacturers, was the largest contributor to the index gain, adding 1.3 percent.
Abu Dhabi Ship Building Co. PJSC and Arkan Building Materials Co. were the two biggest gainers on a percentage basis in Abu Dhabi, advancing 11 percent and 4.8 percent respectively. In Bahrain, Arab Banking Corp. was the top advancer, rising 6.25 percent.
Kuwait’s SE Price Index slipped 0.1 percent, Dubai’s DFM General Index declined 0.4 percent and Qatar’s QE Index dropped 0.2 percent. Oman’s MSM 30 Index finished 0.1 percent higher. Muscat’s stock exchange canceled trading and orders earlier on Sunday following a technical issue.

Israel Sell Sign
Israel’s Tel Aviv-25 Index was little changed after its third weekly gain. The benchmark gauge has dropped 3.9 percent so far this year, and 40 percent of its members closed last week with a sell signal, the highest proportion in the world after Germany’s DAX Index, according to moving average convergence-divergence analysis.
Cellcom Israel Ltd., the country’s biggest cellular provider by subscribers, rose 1.8 percent to 29.56 shekels, the highest level since June 9. The company said it is preparing for a potential debt sale. The shekel rose for a second day on Friday against a basket of major currencies, to 84.52, the highest level since at least 1999. The currency’s 14-day relative-strength index against the U.S. dollar last week signaled that it may have appreciated too fast.