SABIC up as Saudi index hits new 6-month high

Saudi Arabia's index ended higher for a seventh session, reaching a new six-month high as investors bought on hopes of double-digit profit growth for 2012 as well as expectations the bourse will allow direct foreign ownership.

Eight of the 10 largest stocks gained. These included Saudi Basic Industries Corp (SABIC), up 1.1 percent, telecoms operator Etihad Etisalat (Mobily), up 2.6 percent, and Kingdom Holding, up 1 percent.

"Valuations are attractive, with some stocks at record low PEs (price-to-earnings ratio) and the worst-case scenario is that listed companies' profits will grow 10 percent this year," said Hesham Tuffaha at Bakheet Investment Group head of asset management.

"Listed companies' combined profits rose 25 percent last year, but the market actually fell. As political issues take a backseat, company fundamentals will take over."

The index climbed 1 percent to 6,626 points, its highest finish since July 9.

The benchmark fell 3.1 percent in 2011, while the Saudi economy is estimated to have grown 6.7 percent over the same period.

In December, two sources said that Saudi Arabia plans to open up its stock market, but will limit direct foreign ownership to investors with at least $5bn under management and allow each to hold a maximum 5 percent of a stock's issued share capital. Such a move would boost liquidity and probably valuations.

"There's no doubt the Saudi market will open up to foreign investors, but we don't know when that will happen," Tuffaha said.

Elsewhere, First Gulf Bank surged to a six-month closing high after the Abu Dhabi lender reported an 18 percent increase in fourth-quarter profit, helping the emirate's index rise for a 10th session in 11.

FGB's shares jumped 9.9 percent to their highest finish since Aug. 1 after the bank reported a quarterly profit of AED1.02bn ($278.5m), up from AED865.2m a year earlier.

"The strength of FGB's numbers was due to net interest income - this was a good set of numbers ahead of expectations although not dramatically so," said Raj Madha, Rasmala MENA banking analyst.

"In Q3, FGB's net interest income was extremely strong and that continued in Q4."

Abu Dhabi's index rose 1.3 percent to 2,454 points, its highest close since Dec. 12.

Dubai's benchmark also advanced, climbing 2.1 percent to 1,436 points in its eighth gain in nine sessions.

Builder Arabtec and Emaar Properties rose 6.4 and 3 percent respectively. The pair are usually the most liquid stocks and so tend to make larger moves than the index.