Saudi stocks rise to near 16-month high

Investors are positioning themselves for further market appreciation as three sessions remain before the week-long closure of the Saudi stock market, says a Riyadh-based analyst.
The Tadawul market will be closed for Eid Al-Fitr holiday from Aug. 6 until Aug. 12.
The bourse rose to a near 16-month high on Wednesday, close to last year’s peak, as investors bought shares in companies that they believed would profit from increased consumer spending during Ramadan.
The Tadawul All-Share Index climbed 0.65 percent to 7,915.11 points — its highest close since April 2012.
Trading volumes were above the 30-day average for a second consecutive session.
The value of traded shares exceeded SR6 billion on Wednesday.
“The Saudi retail theme is an ongoing topic so far this year,” John Sfakianakis, chief investment strategist at Masic in Saudi Arabia, told Arab News.
He said: “The Tadawul All Share Retail Industries Index is +43.46 percent so far this year vs the Tadawul All Share Index +16.25 percent. An outperformer by all accounts so far.”
He said the market is still seeing robust appetite in the consumer sector as the Ramadan theme story is in full swing.
Faisal Alsayrafi, president of Financial Transaction House (FTH), commented: “Shares of food companies are rising due to Ramadan effect. Generally, during Ramadan food companies perform exceptionally good and report substantial increase in sales.”
He said shares of Savola Group, Saudia Dairy and Foodstuff Co. and Almarai Company made hefty gains on Wednesday.
Sfakianakis also said: “The market traditionally tends to correct prior to the end of Ramadan but we are seeing the opposite this year. Volumes are rising. Banking has also performed quite well over the last few trading sessions and seems to be the accompanying theme going forward.”
He added: “The real estate sector has seen phenomenal gains over a short period of time as well and they are set to gain further. Investors are positioning themselves for further market appreciation as three sessions remain before the week long closure of the market.”
According to Reuters, Asim Bukhtiar, head of research at Riyad Capital, said: “This is unusually high activity especially ahead of Eid holidays — investors are building positions on a positive earnings outlook for the third quarter.”
Bukhtiar added: “Food and agriculture Q3 numbers will benefit from higher sales in Ramadan. That expectation is being reflected in the market.”
Banking shares extended gains that they have made since telecommunications operator Zain Saudi reached an agreement with creditors to extend its outstanding $2.3 billion Islamic loan facility by five years, Reuters said.
The banking sector index added 1.1 percent.