Gulf markets rise ahead of Saudi budget

Dubai — Gulf stock markets resumed rising on Wednesday ahead of the release of Saudi Arabia’s 2015 state budget, which is expected to be announced on Thursday and show the government keeping spending at high levels despite the plunge of oil prices.

Regional bourses collapsed in early December because of fears that reduced oil export revenues would prompt Gulf governments to scale back economic development projects, hurting corporate profits.

But it has become clear in the past week that sharp cut-backs are unlikely.

The Saudi finance minister ruled out major spending cuts, and the country’s Al-Madina newspaper, quoting unnamed sources, reported that the 2015 budget would actually contain a marginal rise in spending, with the government using its huge fiscal reserves to cover a deficit.

So stock market sentiment has improved considerably in recent days. As the panic has eased, attention has returned to valuations, which look much more attractive in the wake of the markets’ plunge and are now close to or in line with those in other emerging markets, fund managers say.

“The recent market correction brought down valuations of a number of well-managed companies to attractive levels, especially considering underlying earnings growth,” Sachin Mohindra, portfolio manager at Abu Dhabi’s Invest AD, said in a note.

“This makes us optimistic about the prospects of GCC equity markets in 2015.”

The main Saudi index climbed 1.8 per cent to 8,700 points, ending on top of chart resistance formed by its downtrend line from September. A further rise on Thursday would break the resistance and be technically bullish.

The rise was broad-based; property developer Dar Al Arkan climbed 2.2 per cent while the biggest bank, National Commercial Bank, gained 1.1 per cent.

Saudi British Bank surged 7.2 per cent after its board said it was recommending a bonus share issue to boost capital by 50 per cent, funding it with retained earnings and reserves, and a cash dividend of SR1.05 per share for 2014, up from SR1 in 2013.

Dubai’s main index surged three per cent, though trading volume dropped by a third to a moderate level, indicating some investors were withdrawing from the market for year-end holidays.

Property stocks again dominated trading, with Deyaar gaining 6.4 per cent and Emaar Properties up 2.9 per cent.

The Abu Dhabi market rose 1.4 per cent, also led by property stocks; Eshraq Properties, the most heavily traded company, rocketed its 15 per cent daily limit.

Qatar climbed 1.4 per cent with Barwa Real Estate, the most heavily traded stock, up 6.7 per cent. Egypt gained 0.6 per cent to 8,766 points. Oman rose 2.5 per cent to 6,377 points. Kuwait edged up 0.7 per cent to 6,547 points.