Tadawul at six-month high

Analysts say investors hopeful after oil prices increased and markets gained globally.

Saudi Arabia's stock index rose to a six-month high Saturday, closing above the 6,000 mark for the first time since Nov 5. The Tadawul All Share Index gained 3.75 per cent to close at 6,019.69. Analysts said Saudi investors were responding to increases in oil prices and tracking the global stock market rally on Thursday and Friday.

Petrochemicals were the leading contributor, accounting for more than 45 per cent of the index's rise, followed by banking, which accounted for nearly 30 per cent. Saudi Basic Industries, the world's largest chemical maker by market value, was the biggest gainer, rising to 63.25 riyals, followed by Saudi Kayan Petrochemical, which closed at 13.4 riyals. Ahmed Sharewy, a deputy director at the brokerage house EFG-Hermes in Riyadh, said Saudi investors were further buoyed by what they saw in global markets on Friday.

The price of a barrel of oil on the New York Mercantile Exchange rose 3.4 per cent to US$58.63. Stock markets around the world, including in the Gulf, also saw healthy gains after Timothy Geithner, the US Treasury secretary, said on Wednesday that no US bank was insolvent. "Saudi's market's performance today is all intertwined with the world oil prices and the stock markets around the world," Mr Sharewy said.

On Friday, the Dow Jones Industrial Average rose almost 2 per cent and London's FTSE 100 Index gained 1.44 per cent. Other GCC markets, which, unlike the Tadawul, do not operate on Saturdays, saw gains on the last day of trading before the weekend. Abu Dhabi's ADX General Index rose 1.1 per cent, Oman stocks recorded their biggest gain since April 22, increasing 2.6 per cent, the Kuwait Stock Exchange Index moved up 0.3 per cent and Bahrain's All Share Index gained 0.4 per cent.

The Dubai Financial Market was in negative territory, closing 0.7 per cent down. Another factor drawing investors to the market is cheap share prices and the belief by many that stocks have reached their bottom. "From the market intelligence that we are seeing, investors in the Gulf are buying." said Ingmar Burgardt, the managing director of the Abu Dhabi branch of the German wealth management company BHF Bank.

Saturday marked the eighth consecutive day that the Tadawul rose. The index has been on a bull run for much of the past two months. Tadawul, like all other global markets, finished last year in negative territory. So far this year, it has gained about 25 per cent. [e-mail]