Investors buy on hopes of profit growth in 2012, hints Saudi bourse will open up
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
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
"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
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.