Saudi Arabia’s main share index rose the most in a month to reach a fresh six-year high on Sunday as investors shook off a slight dip in quarterly profit from the bourse’s biggest stock. Speculation in mid-cap stocks helped Dubai gain.
The Saudi measure advanced 1.1 percent to its highest close since June 2008, up 12.9 percent so far in 2014.
This came despite Saudi Basic Industries Corp reporting that its first-quarter net profit slid 1.8 percent from a year earlier to 6.44 billion riyals ($1.72 billion) after product prices fell. It missed the average analyst forecast of 6.79 billion riyals, but the stock ended 1.4 percent higher.
“SABIC is trading at reasonable valuations so we shouldn’t expect a sharp sell-off, but at the same time there doesn’t appear to be a short-term trigger to take its share price higher,” said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.
“The market will now look at petrochemical product prices and the sector’s second-quarter outlook.”
Other large-cap Saudi stocks climbed, with Saudi Telecom Co (STC) and rival Etihad Etisalat (Mobily) gaining 3.6 and 2.1 percent respectively.
Savola Group, which beat analysts’ estimates with a 43 percent jump in first-quarter net profit, rose 2.7 percent
Major construction firm Abdullah A. M. Al-Khodari Sons fell 0.7 percent after it said quarterly net profit jumped 78 percent on the back of earnings from an auction of plant and machinery, but operating profit plunged 96 percent, partly because of reforms to Saudi Arabia’s labour market which make it more expensive to hire foreign workers.
In Dubai, the index rose 1.7 percent as speculation in mid-cap stocks drove the measure to new heights. Dubai Investments and Arabtec advanced 5.1 and 4.3 percent respectively, while property firm Deyaar climbed 3.8 percent.
Dubai’s stock market has gained 43.7 percent in 2014, having more than doubled in value last year.
“UAE (United Arab Emirates) markets continue to perform well, as is Qatar – especially its small- to mid-cap stocks; these are part of the broader recovery on Gulf markets,” said Sarwar.
“But they’ve been rising for many months without correction or consolidation and bubbles are appearing in certain segments where valuations appear stretched. There could be a correction brewing in those sectors, but for now the momentum is strong.”
Abu Dhabi dipped 0.3 percent as declining bank stocks pulled down the measure, while Qatar’s benchmark edged up 0.2 percent to 12,579 points; it faces major technical resistance on its 2008 peak of 12,637 points.
In Kuwait, Islamic bank Kuwait Finance House dropped 2.3 percent after posting a 13 percent rise in first-quarter profit to 26.06 million dinars ($92.5 million); analysts had forecast 32.76 million dinars.-Reuters
Follow Arabian Post
Select Arabian Post as your preferred source on Google and MSN News for trusted business news and Arab politics and updates.
