Tadawul rebounds as petchem shares rally

JEDDAH – Saudi Arabia’s stock benchmark index rose 0.44 percent Sunday to close at 6,754.23 points, recovering the previous day’s losses.

It fell 0.3 percent Saturday, having been down as much as 2.6 percent intra-day in a knee-jerk reaction to Crown Prince Naif’s death. The index is now down 14.8 percent from early April’s 3-1/2 year peak, as declines in oil and world equity prices have spurred local selling.

"Yesterday’s volatility was to be expected when we have this kind of news, but the market then recovered," said a Riyadh-based fund manager, asking not to be identified.

"The authorities will probably give some clarity on the succession soon and today’s trading will be more linked to what’s happening outside the region."

Gains in world markets Friday helped support Saudi sentiment. Investors fear Sunday’s Greek elections could unleash fresh turmoil in the euro zone if the next government in Athens scraps Greece’s bailout deal, but this is offset by hopes that the world’s major central banks will make a coordinated response to ease any market dislocation.

Shares in telecoms operator Etihad Etisalat (Mobily) climbed 2 percent and Saudi Basic Industries Corp. rose 0.8 percent. Saudi firms are expected to start announcing second-quarter earnings from early July.

"Q2 results will help at least to stabilize the market, but these will be of secondary importance compared with what’s happening in Europe, which is flitting between risk-on and risk-off mode," said the fund manager.

"We should see some buying in select names ahead of results, particularly petrochemicals - people are expecting bad results, but not as bad as recent price movements would justify."

The petrochemicals index climbed 0.4 percent, trimming its year-to-date losses to 4.7 percent. The sector has loosely tracked declines in oil prices, with crude seen as a key indicator for both petrochemical product prices and likely demand.

Qatar’s index was again weak. Bahrain measure rose 0.1 percent to 1,132 points, while markets in the United Arab Emirates, Kuwait and Oman were closed for a religious holiday. Egypt was also shut for the country’s presidential election.

In Doha, the main index slipped 0.01 percent to its lowest close since Oct. 6. This took its 2012 losses to more than 6 percent, making it the worst performing Gulf Arab benchmark. About 1.83 million shares traded, the lowest total since July 2011. "Volumes have been going down lately and I don’t think it will get better anytime soon," said a Doha-based trader on condition of anonymity. – SG/Reuters