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DUBAI / Reuters
Saudi Arabia’s stock market rose sharply on Thursday as banks rallied after the kingdom’s mammoth international bond sale, which could help to unclog liquidity bottlenecks in the economy. Egypt bounced as investors bought into recent dips.
The Saudi index gained 2.3 percent in sharply higher turnover as all but one of the banks advanced, with Samba Financial, which earlier this week had reported a drop in third-quarter net income, jumping 5.2 percent. The kingdom conducted the world’s largest emerging market bond sale on Wednesday, selling $17.5 billion of debt in the government’s first international offer while attracting investor orders totalling almost four times that amount.
“This issuance is a very welcome development for the Saudi equity market and the banking sector in particular,” said Mohamed Eljamal, director of capital markets at Abu Dhabi’s Waha Capital.
“One of the main issues facing the banking sector in Saudi is the tight liquidity in the system and the high loan-to-deposit ratio – this issuance should directly help relieve some of this liquidity pressure.”
Finance Minister Ibrahim Alassaf said in a televised interview that state payments to construction firms would increase in the coming period and that delays in the payments were merely due to “technical reasons”. Eljamal said this could soften the blow to bank earnings from souring construction sector loans.
Other stock market sectors were mainly driven by quarterly earnings announcements. Real estate developer Jabal Omar , which depends heavily on government projects, jumped 6.0 percent after posting a quarterly net profit of 691 million riyals ($184.3 million) ompared to a loss of 127 million riyals a year ago.
Saudi Electricity jumped 5.9 percent after its third-quarter net profit rose 50.8 percent to 4.40 billion riyals; NCB Capital had forecast 1.90 billion riyals. Saudi Telecom rose 2.3 percent to 54.75 riyals after reporting quarterly profit of 2.15 billion riyals, down 7.5 percent year-on-year but in line with forecasts.
Alrajhi Capital said the results were “positive” and “STC continues to prove its resilience in the current tough market environment, an indication of the strength of its business compared to peers.” It kept an “overweight” rating on the stock with a target of 70 riyals.
But rival Etihad Etisalat (Mobily) slumped 6.3 percent after reporting a net loss of 167.7 million riyals versus a loss of 158.3 million riyals in the year-earlier period. Analysts had forecast a profit of 15.06 million riyals.
Savola Group gained 2.1 percent despite reporting a 53.3 percent drop in third-quarter net profit and announcing that it would again halve its quarterly dividend.
But Rabigh Refining and Petrochemical dropped 5.4 percent after reporting a narrower net loss of 217 million riyals compared with a year-ago loss of 460 million riyals.
UAE MIXED, EGYPT REBOUNDS
Elsewhere, Dubai’s index closed 0.6 percent higher with DXB Entertainments rising 4.5 percent in active trade. But neighbouring Abu Dhabi’s index pulled back 0.3 percent with blue chip First Gulf Bank falling 0.9 percent as investors booked profits.
In Doha, the index fell 0.1 percent. Commercial Bank , which reported a net loss earlier this week, slipped a further 1.3 percent.
Egypt’s index bounced 1.4 percent but still closed down 3.0 percent for the week.
Heliopolis Co for Housing, which fell 0.6 percent on Wednesday after reporting a 47.9 percent drop in quarterly net profit, rebounded 8.1 percent. Juhayna Food Industries rose 0.5 percent after reporting a 34 percent drop in third-quarter net profit.