Saudi Arabia's stock market closed lower Saturday as investors booked profits after a week that saw the Tadawul gain more than 4 per cent. Banks and financial services companies pulled the Tadawul All-Shares Index 1.1 per cent lower to close at 5,984.56. Regional stock markets recorded major gains last week as the Dubai Financial Market surged 13 per cent, Qatar's Doha Securities Market advanced nearly 11 per cent and Abu Dhabi Securities Exchange rose 5.4 per cent. In the meantime, oil prices topped US$70 a barrel.
Saudi stocks did not follow the gains made on other global markets last Thursday and Friday, when the Tadawul was closed for trading. Udo Schaeberle, the head of Gulf clients at the German wealth management company BHF Bank, said Saudi investors were not moved by Friday's good news because the kingdom's market had already outperformed most other markets in the GCC and around the world last month. "Stocks just couldn't go up any more because Saudi investors have seen more gains than others and some of them are taking their profits," Mr Schaeberle said. "The Saudi market has done extremely well in the last three to four weeks. Saudi has been ahead of the rest."
Banks, petrochemicals and the property sector all declined and were the leading contributors to falls among Saudi stocks. The declines could also signal the beginning of a summer trading slowdown, which may put a stop to rising share prices or even cause them to decline. "In the next three to four weeks we could start seeing profit-taking by GCC investors," Mr Schaeberle said. "That's the only pause I see in the GCC markets. However, I don't think the low trading summer months count as much as the strong fundamentals of the region."
His optimism is driven by the rising price of crude, which has rebounded after falling as low as $35 a barrel in February. Oil prices touched $70 a barrel on the New York Mercantile Exchange on Friday before closing down at $68.44 "We do not believe oil prices of today are reflected in the stock markets, because of that we still see that share prices have a way to go," Mr Schaeberle said. Almarai, the Saudi dairy food company which is the largest in the region, said Saturday it transferred its 75 per cent stake in Jordan's Taiba Investment and Advanced Food to International Dairy and Juice (IDJ) at cost, according to a statement posted on the Tadawul website.
IDJ is 48 per cent owned by Almarai and 52 per cent by PepsiCo. Almarai completed the acquisition of Taiba for 290 million Saudi riyals (Dh283.9m) in January and as part of its acquisition agreement had to repay Taiba's debts to banks and creditors estimated at about 85m riyals, Dow Jones reported. Almarai shares rose 1.73 per cent to close at 147 riyals Saturday. mjalili@thenational.ae