Saudi Bank Stocks Rise to Record Amid Mideast Gains: Inside EM

(Bloomberg) --

Banking and petrochemical stocks led gains in Saudi Arabia as rising crude prices and the prospect of faster growth fanned investor confidence ahead of first-half earnings season.

The country’s Tadawul Index rose almost 0.5% on Sunday, snapping two days of declines, as most markets across the Middle East rallied. Abu Dhabi’s main index advanced 0.7%, while Dubai’s retreated 0.4%. Al Rajhi Bank, Alinma Bank and Saudi Kayan Petrochemical Co. were among those that rose the most on Saudi Arabia’s Tadawal Index. A sub-index of banks climbed to all-time high.

The gains came against a backdrop of stalled oil-supply negotiations between OPEC and its allies after a rebellion by the United Arab Emirates over output levels. Saudi stocks pared gains after the UAE said Sunday it rejects a plan by other members of OPEC+ to extend the group’s agreement to curb oil production beyond April 2022. The talks resume on Monday with Brent crude prices at a three-year high.

Read: High-Stakes Oil Diplomacy Puts Future of OPEC+ Deal at Risk

“The signs of a breakdown in OPEC+ coordination on output are clear but the market is weighing this against optimism that demand growth will outstrip supply growth,” said Hasnain Malik, the head of research at Tellimer in Dubai. “That rests on the assumption that the resurgence in Covid infections does not derail the recovery and that Iranian barrels do not quickly return.”

Elsewhere, stocks in Qatar, Kuwait, Oman, Egypt and Israel also rose.

MIDDLE EASTERN MARKETS:

• “Saudi banks’ price-to-book valuation multiples are edging up” versus Gulf peers this year “driven by a higher oil price and solid growth prospects,” said Bloomberg Intelligence analyst Edmond Christou
  • “However, the market looks optimistic on lower provisioning this year but we stay cautious,” he said
  • NOTE: Midyear Outlook: Gulf, South Africa Financials
• ADX General Index rises as much as 1.2%
  • IHC leads gains as market capitalization grows further to 227 billion dirhams ($62 billion)
  • READ: IHC Continues Dizzying Rally to Become UAE’s Most Valuable Firm
• Dubai Financial Market General Index declines to lowest since May 31
  • Emirates NBD -1.1%; Emaar Malls -1.5%; Dubai Investments -1.2%
• Kuwaiti stocks advance for the fifth day in past six
• Egypt-based TMG Holding surges to highest since February after saying total sales rose to a record 21 billion Egyptian pounds ($1.3 billion) in 1H and total sales guidance was revised upwards to around 30 billion Egyptian pounds for the full year
• MSCI Emerging Markets Index fell 1.8% last week, the most since mid-May

Markets snapshot as of 4:30 p.m. in Dubai:

• Tadawul All Share Index +0.5% at close
• Dubai Financial Market General Index -0.4% at close
• ADX General Index +0.7% at close
• Kuwait Premier Market +0.2% at close
• QE Index +0.2% at close
• Bahrain Bourse All Share Index -0.6% at close
• MSM 30 Index +0.5% at close
• EGX 30 Index +0.9% at close
• TA-35 Index +0.1%

Key News:

• A high-stakes game of oil diplomacy pits Saudi Arabia against long-time ally Abu Dhabi. And the result of their fight will shape not just the price of oil for the next year, but the future of the global energy industry
• The United Arab Emirates has overtaken Seychelles to become the world’s most vaccinated nation, according to Bloomberg tracking data

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