Saudi stocks surged to the highest level in more than three months as the market reopened yesterday following the week-long Eid Al-Fitr holiday.

The Tadawul All-Share Index (TASI) ended 1.44 percent higher at 7,104.48 points — the highest since May 13. The market has increased 11 percent so far this year.
The petrochemical and banking indices ended 1.37 percent (6,168.63 points) and 1 percent (16,016.60 ) higher, respectively.

The value of traded shares exceeded SR6 billion yesterday.
Commenting on Tadawul’s report, Basil Al-Ghalayini, CEO of BMG Financial Group, said: “This surge could be attributed to the comeback of liquidity into the local system post the long Eid break. There is a tendency among traders to liquidate part of their local positions before the long Eid break so they take advantage of the international markets, which are open for business. Tadawul may reconsider its Eid break timings, to limit them to two days for example, in order to minimize these cash movements.”

Jarmo T. Kotilaine, chief economist at the National Commercial Bank, said: “Banking and petrochemicals are in some ways the two main bellwether sectors from the perspective of the global environment. Less global risk aversion and greater optimism about growth tends to benefit petrochemicals in terms of better demand prospects and higher oil prices which naturally boost the relative competitiveness of GCC producers.”

He said: “Even though Saudi banks are highly insulated from the global situation, they naturally operate in an international marketplace. Less anxiety about global growth reduces the risk of NPLs (nonperforming loans) and provisions, and promises greater domestic confidence and growth drivers beyond ones linked to government spending and the most resilient, purely domestic factors.”

Kotilaine emphasized that these two sectors tend to respond to and reflect swings in global risk aversion and market confidence even if the economic fundamentals move much more slowly.

But Farouk Miah, head of equity research at NCB Capital, said he believed that the market had risen, not necessarily due to banks or petchem stocks.

TASI was up 1.44 percent. The best performer sectors were Insurance which was up 3.85 percent, Multi-Investment was up 2.97 percent and Real Estate was up 3.67 percent.

“This indicates the strong performance of the market was led by more of the “speculative” stocks given insurance and real estate are the best performing sectors,” Miah said.

Saudi Basic Industries Corp. (SABIC) shares advanced by 1.37 percent to SR 92.50 — the highest level since June 30. Shares in Al-Rajhi Bank, the Kingdom’s biggest by market value, rose to SR 74, the most since Aug 4.

In the Real Estate sector, Dar Al-Arkan Real Estate Development Co. shares surged 6.99 percent to SR 9.95 — the highest since July 8.