KSA Blue Chips Up for Grabs
JEDDAH: Saudi Arabia’s stock market gained strength on Sunday, a day before its opening to direct foreign investment.
Qualified foreign investors with licenses from the Capital Market Authority will be able to buy local stocks from Monday, after previously being limited to indirect channels such as swaps.
The Tadawul All Share Index (TASI) jumped 1.3 percent on Sunday, buoyed by blue chips which are seen as most likely to be targeted by foreign investors, and have been included in a provisional benchmark by index compiler MSCI.
Some analysts say stock prices are likely to rise rapidly as foreign funds start flowing in.
TASI has risen 16 percent in 2015, the highest in the Middle East. The bourse is bigger than all the major stock markets in the GCC combined. It has been a key source of wealth creation for the Saudi economy with relatively high retail participation, said Hootan Yazhari, head of MENA and Global Frontier Markets Research at Bank of America Merrill Lynch.
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Brent crude, the benchmark for more than half the world’s oil, climbed 11 percent this year to $63.87 a barrel on Friday.
Al-Rajhi gained 1.6 percent, the most since May 14, to SR66.95. SABIC, the world’s top petrochemicals manufacturer by sales, climbed 2.3 percent to SR105.5. Miner Maaden surged 3.7 percent and National Commercial Bank added 1.2 percent.
John Sfakianakis, Middle East director at Ashmore Group based in Riyadh, said: “Listed firms will benefit as best practice will be applied over time. Investors will also win as transparency and corporate governance would be enhanced.”
He added: “Opportunities are front-loaded and much is anticipated in terms of flows of foreign funds from abroad. The biggest challenge is to maintain a steady stream of good results that helps continually create appetite.”