Banks and insurance top gainers after gov't orders CMA to lift restrictions on Gulf investors.
Saudis piled into bank and insurance stocks on Tuesday after the government ordered the market regulator to lift restrictions on investment in financial services by other Gulf Arab oil producers.
Saudi Arabia, the world's largest oil exporter, has been dragging its feet on an agreement to give investors from Kuwait, Qatar, the United Arab Emirates, Bahrain and Oman unfettered access to its stock market.
The cabinet ordered the regulator on Monday to ensure "full equality" on the stock market for investors from the five countries, triggering buying in financial which have been off-limits to Saudi Arabia's neighbours.
"Saudi investors are buying now before the prices rise," said Youssef Kassantini, chief executive officer at Bourse Experts, a Riyadh-based advisory business.
Banks and insurance stocks accounted for the top 14 gainers on the main Saudi index. Al-Rajhi Banking and Investment, the largest Gulf lender by market value, gained 1.98%, and Saudi Hollandi Bank rose 6.53%.
Saudi's benchmark index, the worst performer in the Gulf this year, closed 0.58 percent higher at 8,162.82 points.
The kingdom agreed in 2005 to open the largest Arab stock market to other Gulf Arabs as part of moves toward regional economic integration but backtracked later, saying sectors such as banking and insurance would remain off-limits.
"(Monday's decision) will increase the number of investors in the banking sector and bring in a new class of clients," said Beshr Bakheet, chief executive of Riyadh-based Bakheet Investment Co. Saudi banks trade at a discount to the Riyadh market and many of their Gulf peers, he said.
Saudi bank stocks are priced at around 14 times 2007 earnings, according to Reuters data, compared with around 16 times for banks in Kuwait, the Gulf's best-performing benchmark this year.
The cabinet order, carried by the official Saudi Press Agency, did not say when the restrictions on Gulf investors would be lifted.
Bakheet said he expected it to be within days rather than weeks.