#Saudi Stocks Jump Most Since 2020 Before Market Liberalisation - Bloomberg

Saudi Stocks Jump Most Since 2020 Before Market Liberalization - Bloomberg

Saudi stocks are heading for their best month in five years, finding support from a rally in broader emerging markers, rising commodity prices and the kingdom’s looming loosening of foreign investment rules.

The Tadawul All Share Index has climbed 9% in January, on track for its biggest monthly advance since November 2020, albeit slightly underperforming an 11% gain by the MSCI emerging-market equity benchmark.

The world’s biggest oil exporter is set to lift so-called Qualified Foreign Investor rules and allow non-residents to invest directly on the main exchange starting on Feb. 1. The move is seen as a big step toward allowing foreigners to buy majority stakes in Saudi stocks.

The liberalization is seen triggering at least $10 billion of inflows to the market, according to JPMorgan Chase & Co. and Franklin Templeton. Al Rajhi Bank and Saudi National Bank as well as Saudi Aramco and Saudi Arabian Mining Co. contributed most to the Tadawul’s rally this month.

The January rally has also been fueled by a rise in oil prices, a record run for metals and continued appetite for emerging-market stocks. Brent crude prices rose 15% in January, snapping five months of losses.

“A combination of a number of factors, including oil, QFI changes and a number of targeted reforms,” contributed to the start-of-year jump, said Junaid Ansari, head of research and strategy at Kamco Investment Co.

The Saudi stock revival comes after a dismal period for the Tadawul, which dropped 13% last year amid weak oil prices, even as its EM peers enjoyed their best performance in eight years. Saudi authorities reformed sectors like real estate, insurance, pharma and healthcare and reduced the scale of its mega projects, helping revive investor sentiment.

Following this month’s advance, the Tadawul trades at 15.8 times estimated earnings, near its 10-year average of 16 times.

“Valuations also play a key role, especially coming from a decline last year and with a low base,” Ansari said. Sector changes and “recalibrating some of the biggest projects in the Kingdom are appealing to investors and help address concerns like liquidity, funding and free float,” he said.

Gulf bourses end lower on Iran jitters | Reuters

Gulf bourses end lower on Iran jitters | Reuters

Stock markets in the Gulf closed down on Thursday, as fears of a possible U.S. military action against Iran raised concerns that the region would bear the brunt of any Iranian retaliation.

The deployment of a U.S. aircraft carrier and supporting warships to the Middle East this week has broadened U.S. President Donald Trump's options for potential military action, following his repeated threats to intervene over Iran's crackdown.

Saudi Arabia's benchmark index (.TASI), opens new tab dropped 0.7%, ending a five-day winning streak, hit by a 1.3% fall in Al Rajhi Bank (1120.SE), opens new tab and a 2.6% slide in ACWA Power (2082.SE), opens new tab.

Oil behemoth Saudi Aramco (2222.SE), opens new tab, however, gained 0.6%.

 

Crude prices, a catalyst for the Gulf's financial markets, hit a four-month high as Trump warned Iran of possible attacks if it did not make a deal on nuclear weapons.

Most sectors were lower on the day, but the losses were contained by energy, with Aramco supported by rising oil prices, said Milad Azar, market analyst at XTB MENA.

According to Azar, sentiment remains underpinned by fourth-quarter earnings and optimism ahead of next week's opening of the market to foreign investors, leaving room for further gains on strong results, firmer oil, and solid non-oil fundamentals.

Bank AlJazira (1020.SE), opens new tab advanced 4.2%, its biggest intraday gain in four months, after posting a strong increase in annual net profit and proposing a 0.50 riyal-per-share cash dividend for the second half — its first in three and a half years.

In mid-January, Saudi Arabia, Qatar, Oman and Egypt urged Washington not to carry out a strike on Iran.

Dubai's main share index (.DFMGI), opens new tab retreated 0.5%, weighed down by a 1.4% fall in toll operator Salik (SALIK.DU), opens new tab.

In Abu Dhabi, the index (.FTFADGI), opens new tab lost 0.3%, with Abu Dhabi Commercial Bank (ADCB.AD), opens new tab falling 1.7%. After market hours, the lender reported a fourth-quarter net profit of 3.34 billion dirhams ($909.41 million), up from 2.57 billion dirhams a year ago.

The UAE said on Monday it would not allow its airspace, territory, or waters to be used for hostile military action against Iran, reaffirming its neutrality and commitment to regional stability.

The Qatari index (.QSI), opens new tab finished 0.6% lower, with Qatar National Bank (QNBK.QA), opens new tab, the Gulf's biggest lender by assets, sliding 1.3%.

The Egyptian bourse was closed for a public holiday.