Saudi Arabian stocks rose the most in three weeks as crude oil climbed past US$65 a barrel and evidence mounted that the global economy is on the road to recovery. The Tadawul exchange, the only Gulf exchange that is open to trading on Saturdays, gained 2.34 per cent to 5924.96, its highest value since May 9. Saudi Basic Industries Corporation (SABIC), the world's largest chemical maker by market value, led the gains among oil and chemical companies with a rise of 6.18 per cent to 68.75 Saudi riyals. Halwani Brothers, the Saudi Arabia-based food maker, rose to its highest level in more than a year of 40.8 riyals.
"There haven't been specific disclosures to push the market up coming from the listed firms, the gains are mainly driven by the rise in oil prices at the moment," said Ayman el Saheb, the director of operations at Darahem Financial Brokerage. Analysts say signs of economic recovery are also helping confidence return to the markets. "Global optimism is another catalyst that's pushing the index higher," Ali Khan, the managing director of Arqaam Capital, told Bloomberg.
The Tadawul All Share Index is up more than 5 per cent this month. With the Saudi market starting the week on gains and high trading volumes, supported by rising oil prices, Gulf shares are expected to climb this week. Petrochemical stocks are poised for gains, with crude oil futures rising for the fifth straight day on Friday and hitting a six-month high of US$66.47 a barrel, fuelling stocks such as the bellwether SABIC.
"We expect that the Saudi stock market will be stable during this week as investors regain confidence in light of the improvement of global economic conditions," Bakheet Investment Group, or BIG, told Zawya Dow Jones. The market fell about 4.3 per cent last week on profit taking after a sharp rally starting in early March, although the Tadawul benchmark index remains the Gulf's best performer this year, up more than 21 per cent. Stocks worldwide rallied on Friday after reports showed industrial production in Japan increased the most since 1953, while India's economy expanded faster than economists estimated.
Crude oil for July delivery rose $1.14, or 1.8 per cent, to $66.22 a barrel, the highest since Nov 4. Oil has advanced 30 per cent this month, the biggest monthly increase since March 1999. Saudi Arabia is the world's largest oil exporter. Saudi Electricity, the state-controlled power producer, rose 1 per cent to 10 riyals after the company said it would establish new electricity generation, transport and distribution units as part of its restructuring plans.
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