Bloomberg News

Saudi Shares Rise to Three-Year High on Bets Bourse May Open Up

February 22, 2012

Feb. 22 (Bloomberg) -- Saudi Arabia’s stock index advanced to the highest level in more than three years on investor speculation the Arab world’s biggest stock market may this year open up to foreign investors.

Saudi Basic Industries Corp., the world’s biggest petrochemicals maker, gained to the highest level since August. Al-Rajhi Bank, Saudi Arabia’s largest publicly traded lender by market value, rose 1.3 percent. The Tadawul All Share Index climbed 0.9 percent to 7,031.26, the highest since September 2008, at the 3:30 p.m. close in Riyadh, bringing its increase this week to 3.2 percent. The Bloomberg GCC 200 Index added 0.5 percent.

“Some investors in regional markets are putting money into Saudi Arabia with the view that the bourse may soon open up to direct foreign ownership,” said Asim Bukhtiar, an equity analyst at Riyad Capital. “Volumes have been going up in Saudi Arabia but are generally muted in regional bourses.”

Saudi Arabia’s Capital Market Authority is in discussions with international banks to open the country’s stock exchange to foreign investors early 2012, three bankers familiar with the matter said in October. Foreign, non-Persian Gulf investors currently can’t directly invest in Saudi shares. The kingdom hasn’t set a timeline for opening its market to foreigners, stock exchange Chief Executive Officer Abdullah Al-Suweilmy said in December.

Swap Agreement

The stock exchange will directly link swap-agreement portfolios to primary beneficiaries in coordination with the market regulator and brokerages, a statement on the Saudi bourse said yesterday. This will replace the previous process of combining beneficiaries under the name of authorized persons.

In a growing sign of openness, the market regulator said in January it will allow overseas companies to list securities on the bourse.

Non-resident foreigners are permitted to trade through share-swap transactions and exchange-traded funds, with the market regulator approving the first ETF in March 2010. The government allowed citizens of neighboring Gulf countries to buy and sell local shares in 2007.

About 417 million shares were traded in Saudi Arabia today, compared with a 12-month daily average of 228 million shares. In Qatar, about 6.8 million shares were traded today, compared with the past year’s daily average of 7.1 million shares.

Crude Exporter

“With such significant increase in volumes along with a rising trend, this indicates that the Saudi stock market is setting up to break through a three-year consolidation range since September 2009 to date, and a firewall resistance at 7,000,” Musa Haddad, head trader at the National Bank of Abu Dhabi PJSC’s asset-management group, said in a note to investors yesterday. “Such breakout on high volumes sets the stage for a long-term uptrend towards 8,000 - 10,000 levels.”

Oil earlier today traded near a nine-month high after United Nations inspectors in Iran were denied access to a suspected nuclear site, raising concern that tensions between OPEC’s second-biggest producer and Western nations may escalate. Oil for April delivery on the New York Mercantile Exchange rose as much as 16 cents to $106.41 a barrel before trading 0.4 percent lower at $105.82 at 1:51 p.m. in London.

Saudi Arabia, the world’s biggest crude exporter, depended on oil for 93 percent of its revenue in 2011.

Sabic advanced 1.3 percent to 100.5 riyals, the highest since Aug. 3. Al Rajhi Bank gained to 75.5 riyals, the highest since July 11.

Oman’s MSM 30 Index and Qatar’s QE Index gained 0.1 percent. Dubai’s DFM General Index and Bahrain’s BB All Share Index advanced 0.8 percent. Abu Dhabi’s ADX General Index increased 0.3 percent, while Kuwait’s gauge fell 0.2 percent.

--Editors: Shanthy Nambiar, Claudia Maedler

To contact the reporter on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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