Saudi Arabian leading other markets after oil price jump

Brent crude oil surged 13 per cent in the two days through Friday to US$61.52. — Reuters pic
Brent crude oil surged 13 per cent in the two days through Friday to US$61.52. — Reuters pic

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RIYADH, Feb 15 — Saudi Arabia’s stocks led a rally in most regional equity markets after Brent crude had its biggest two- day advance since 2009, stoking optimism oil revenue in Gulf nations will rise.

The Tadawul All Share Index in the world’s biggest oil exporter rose 2 per cent to 9,442.43 at 2:31 p.m. in Riyadh, the highest since Nov. 24. Abu Dhabi’s ADX General Index and Dubai’s DFM General Index both jumped 1.5 per cent to close at the strongest levels since Dec. 7 and Dec. 28 respectively. Qatar’s QE Index rose 0.7 per cent.

Brent surged 13 per cent in the two days through Friday to US$61.52 (RM221) a barrel, the most since January 2009, after US drillers cut the number of rigs in service to the fewest since August 2011, stoking speculation it will slow crude output and curb a global glut. The Standard & Poor’s 500 Index closed at an all-time high and the Stoxx Europe 600 Index added 0.6 per cent on Feb. 13.

“With oil breaking above US$60, stocks will react positively in the interim and the global equity rally last week is also a driving factor, helping regional markets move higher,” Ramez Merhi, a Dubai-based director for asset management at Al Masah Capital Ltd., which manages US$500 million, said by e-mail. “The price of Brent found a floor at US$50 last month, a price at which there looks to be strong demand. The market has been waiting for some semblance of a foundation to build off of and it looks like that’s what has happened.”

Oil prices

The six-nation Gulf Cooperation Council, which includes the United Arab Emirates, Saudi Arabia and Qatar, is home to about a third of the world’s proven oil reserves. Governments in the region rely on oil revenue to fund their budgets.

Oil prices may rise further after Libya’s state-run oil company warned yesterday it would shut production at all fields if authorities failed to contain an escalation of attacks on facilities that has cut crude output to a year-low.

“The current turmoil in Libya is obviously seen as an additional boost for oil prices,” Julian Bruce, the head of institutional trading at EFG-Hermes U.A.E. Ltd. in Dubai, said by e-mail.

Tadawul’s RSI

Brent has risen 7.3 per cent this year, helping fuel a 13 per cent rise in Saudi Arabian stocks. The Tadawul is the world’s best performing index this year among more than 90 gauges tracked globally by Bloomberg in dollar terms after Russia’s main measure. The gauge’s 14-day relative-strength index climbed to 67. A level close to 70 suggests to some analysts that securities have risen too much and are poised to drop.

In Saudi Arabia, Saudi Basic Industries Corp. added 2 per cent. The company, one of the world’s largest petrochemicals makers, named Yousef Al-Benyan as acting chief executive officer after Mohammed Al-Mady stepped down to be president of Saudi Arabia’s Military Industries Corp.

Saudi real estate developer Jabal Omar Development Co. jumped 7.5 per cent to 69.25 riyals, the highest on record.

Aldar Properties PJSC, the largest publicly traded real estate developer in Abu Dhabi, jumped 5.8 per cent to 2.74 dirhams, the highest since Dec. 29. The company appointed Talal Al Dhiyebi as chief development officer, replacing Gurjit Singh.

Emaar Properties PJSC, the developer of Dubai’s Burj Khalifa, the world’s tallest tower, advanced 4.6 per cent to 7.58 dirhams. The company said it continues to pursue opportunities in Egypt.

The Dubai-based developer’s net income advanced 28 per cent to 3.29 billion dirhams (US$901 million), the company said in an e-mailed statement after the market closed. The mean estimate of nine analysts surveyed by Bloomberg was 3.31 billion dirhams.

Egypt rises

Oman’s MSM 30 Index climbed 0.3 per cent, while Bahrain’s BB All Share Index lost 0.4 per cent. Kuwait’s SE Price Index fell 0.1 per cent.

Egypt’s EGX 30 Index advanced 0.6 per cent. Talaat Moustafa Group Holding, the country’s biggest publicly traded property developer, added 0.5 per cent after El Shorouk newspaper reported the company reached a deal with the government to settle a five- year old land dispute.

Israel’s TA-25 Index gained 0.4 per cent, the most since Feb. 5. Frutarom Industries Ltd. led the increase with a 2.7 per cent advance to 123.80 shekels, the most since Feb. 4. The yield on the government’s bond due 2024 gained three basis points to 1.84 per cent. — Bloomberg

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