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State payment plan lifts Saudi index

Government’s plan to pay debts to the private sector boosted the market, lifting Saudi index

All 12 listed banks rose; they have been bullish since last month’s bond sale

Long-term investors returned to buy blue chips that dropped sharply over past year

 

The Saudi index gained 2.1 per cent to 6,328 points in its fourth straight day of gains, rising above minor technical resistance at the September peak of 6,238 points. The plan by Saudi Arabia’s government to pay debts to the private sector boosted the market. (Click here to read more on the plan)

“The trend is bullish as (the index) is trading over the 14-, 21- and 50-week simple moving average levels,” Abu Dhabi’s NBAD Securities said in a note.

Payment required

The Riyadh government aims to settle its unpaid debts to the private sector before the end of December, the state news agency reported late on Monday.

The delayed payments are believed to total more than $20 billion, concentrated in the construction sector. Builder Al Khodari climbed 4.2 per cent in heavy trade.

Saudi Pharmaceutical Industries, the only listed drug producer, gained 2.8 per cent in a second day of heavy trade after the energy minister said on Sunday that Riyadh planned to develop automotive, pharmaceutical and solar industries. (Read more on this story here)

All 12 listed banks rose; they have been bullish since the government’s successful $17.5 billion international bond sale last month. Samba jumped 4.2 per cent.

“This has been a relief rally for construction stocks and a fundamentals-driven rally for the banking and petrochemical sectors,” said Santhosh Balakrishnan, research analyst at Riyad Capital.

He added that long-term investors had returned to buy blue chips that dropped sharply over the past year. For example, Samba is still down 13.8 per cent year-to-date, but has risen 21.9 per cent over the last 30 days.

UAE and Qatar highlights

Abu Dhabi’s index rose 1.4 per cent as the largest listed developer, Aldar Properties, climbed 1.5 per cent to AED2.65.

Aldar posted net attributable profit for the third quarter of AED747.8 million ($203.6m), up 17.9 per cent; SICO Bahrain had forecast AED480m and EFG Hermes AED682m.

Analysts at Naeem Brokerage said gross profit had recovered on a surge in revenues; they kept a “buy” rating on the stock with a target of AED3.88.

The largest listed developer in neighbouring Dubai, Emaar Properties, gained 2.3 per cent, helping lift Dubai’s index 0.8 per cent. Builder Arabtec, which has not yet reported quarterly earnings, advanced 3.1 per cent.

Qatar’s index closed up 0.2 per cent. Vodafone Qatar rose by 0.9 per cent after reporting a quarterly loss of QAR63.9m ($17.6m), compared with a loss of QAR113.6m a year ago and Arqaam Capital’s forecast of a QAR94m loss.