Saudi to stay well-supported by oil, banks

DUBAI – 6 November 2017: Strong oil prices and buying interest in banking shares look set to support the Saudi Arabian stock market on Monday, as the shock of the government’s anti-corruption crackdown fades.

The Saudi index fell as much as 2.2 percent in an initial response to the crackdown on Sunday, as investors worried that people implicated in the investigation could be forced to dump stocks, but recovered to close up 0.3 percent.

One regional fund manager detected buying by government-linked funds seeking to prevent a sharp drop. But in any case, the sharp rebound from the market’s lows may deter investors from pushing prices down aggressively.

Following the close on Sunday, Kingdom Holding said it had the support of the Saudi government after billionaire chairman Prince Alwaleed bin Talal was detained. This suggested authorities may take care not to force it into damaging sales of assets, and after its shares plunged 7.6 percent on Sunday, they are close to book value, meaning there may be little further downside.

Another positive for the Saudi market is strong oil prices; on Monday morning Brent oil has hit $62.44 per barrel, its highest level since July 2015.

In Dubai, Air Arabia may attract interest after reporting a third quarter net profit of 376 million dirhams ($102.5 million), up from 297 million dirhams a year ago. EFG Hermes had forecast 202 million dirhams and SICO Bahrain, 285 million dirhams.

Shuaa Capital posted a third-quarter profit attributable to shareholders of 23 ‍​million dirhams ($6.3 million) versus a loss of 35.3 million dirhams a year ago. However, investors already pushed the stock up sharply in the last few days in anticipation of a strong result, which was in line with the scale of improvement seen in second-quarter earnings.