Saudi Arabia’s main stock index rose above the 8,000-point level on Monday for
the first time in nearly five years.
The Saudi index advanced 1.3 percent to 8,072 points, its highest finish
since September 2008; it has gained in five of the last six trading
sessions.
The kingdom’s bourse will close from Tuesday for Eid holidays and resume
trading on August 13; investors’ willingness to hold stocks over the holidays is a
bullish signal.
“The recent buying is positioning ahead of a post-Eid rally,” said Amer Khan,
fund manager at Shuaa Asset Management.
“From a fundamental perspective, quarterly earnings were either in line or
better than expectations, underlining the strength in the Saudi economy.”
The country’s economic fundamentals justify the increase in share prices
although some sectors, such as those driven by local consumption, are now
trading at a premium to regional valuations, he added.
The Saudi index’s break this week above major resistance at 7,944 points, the
April 2012 peak, was long-term bullish and leaves no major chart barrier before
8,782 points, the 61.8 percent retracement of the fall from January 2008.
The petrochemical and banking sectors, which together account for around 60
percent of total market value, rose 1.3 and 1.8 percent on Monday.
In Dubai, the measure rose 1.2 percent to hit a fresh 56-month high as upbeat
second-quarter earnings boosted retail investor sentiment.
Many analysts say that with the index now up 63 percent year-to-date, it is
in for a significant pull-back, but there are so far no clear technical signs of
that and the charts remain long-term bullish.
“Most of the blue-chip companies have reported second-quarter earnings and
although they were solid, I think they are priced in,” said Mohab Maher, senior
manager of the institutional desk at MENA Corp. The market is heading towards a
correction in the coming two weeks, he adds.
The market has been dominated by retail activity as investors look for
short-term gains. Dubai Investments Co and Dubai Financial Market climbed 1.6
and 3.5 percent respectively, the two most active stocks.
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