GCC shares rose as Saudi Arabia kept to its pledge to maintain spending next year despite oil prices falling by nearly 50 per cent since June.
Investors were also betting that oil prices, which support regional economies, might not decline below US$60 a barrel, analysts said.
The kingdom’s benchmark stock index, the region’s biggest in terms of market capitalisation, rose 1.3 per cent after its finance ministry announced its budget for next year before closing 0.47 per cent higher.
In Dubai, the DFM General index added 1.4 per cent, while the ADSM Index in Abu Dhabi closed up 0.1 per cent higher.
“I think what was expected was far worse,” said Allen Sandeep, the head of research at Egyptian investment bank Naeem Holdings in Cairo.
“We are just waiting and watching as to what really unfolds, the real impact of the fall in oil price.
“The markets are up as well because oil prices are stabilising now. It looks like it is stabilising at about $60 a barrel.
“I’m getting the feeling that officials in the Gulf are banking on oil at $70 to $75 a barrel. But you never know.”
After the 45 per cent plunge in oil prices this year, Saudi Arabia said that its revenue was projected to fall to 715 billion riyals (Dh699.36bn) next year, from 1.046 trillion riyals this year.
Riyadh projects next year’s expenditure to be at 860bn riyals.
The Saudi government spent about 1.1 trillion riyals this year, about 30 per cent higher than its target of 855bn riyals announced last year.
Riyadh’s budget deficit for this year was estimated to be at 54bn riyals and was expected to widen to 145bn riyals next year, said the finance ministry.
About 85 per cent of Saudi Arabian exports and 90 per cent of government revenues are directly derived from the hydrocarbons sector, according to Standard & Poor’s.
Alinma Bank, a Sharia-compliant lender, and Maaden, a mining company, led the stockmarket gains in Saudi Arabia, rising 4.3 per cent and 6.5 per cent, respectively.
In Dubai, shares of Arabtec, the biggest listed builder in the UAE, rose 5.3 per cent to Dh3.19 a share, while Dubai Islamic Bank, the emirate’s biggest Islamic lender, climbed 2.2 per cent to Dh6.95 a share. Brent crude prices have tumbled this year amid increased supply from American shale-oil producers and waning demand from key emerging-market importers such as China.
At Opec’s last meeting last month, the group refrained from cutting supply to bolster prices.
Saudi Arabia indicated this week that it was not interested in reducing production even if oil prices plummet to $20 a barrel.
Brent crude prices fell 2.5 per cent to $60.12 a barrel at the close of trade on Wednesday.
mkassem@thenational.ae
