Saudi stocks get week off to a flyer

POSITIVE SENTIMENT: Saudi stocks rose sharply on Saturday. (Getty Images)

Saudi shares surged 9.5 percent on Saturday, led by blue chips, as investors took heart from a global stock rally and reassuring remarks by King Abdullah on the state of the economy.

Saudi Basic Industries Corp. (SABIC) ended up by the 10 percent limit, property developer Dar Al Arkan closed 9.9 percent higher and Saudi Telecom Co. rose 9.84 percent.

The all-share index gained 9.51 percent to end at 4,845 points. The Saudi bourse has lost about 51 percent of its value since oil prices began declining from a record $147 per barrel reached on July 11.

"We had a good performance in international markets on Thursday and Friday and this translated into a positive way in the Saudi bourse after the king's statement," said John Sfakianakis, chief economist at SABB bank, HSBC's Saudi subsidiary.

King Abdullah said in a published interview that aside from a climate of tension and fear, the global financial crisis did not have a real impact on Saudi Arabia.

"Yes the crisis... created tension and fear... But as far as the state and state funds are concerned, we have not been impacted," he told Kuwaiti newspaper Al Seyassah.

Apparently hinting at the depressed local stock market, King Abdullah said: "The economy of our country is sound and strong... Our people will not be hit by any loss, it is just a victim of unjustified panic."

Sfakianakis said the king's statement acted as "a psychological booster to confidence in the local economy".

"This market is driven by sentiment... We had a temporary change of sentiment, but the market could very well go downward again," he said.

Turki Fadak, a member of the semi-official think tank Saudi Economic Association, said rally indicated that investors were beginning to see the market bottoming out.

"There is feeling in the market that we have reached the bottom especially after we stopped hearing negative news from abroad," he said. (Reuters)

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