DUBAI: Bourses in Saudi Arabia and Egypt rose in early trade on Wednesday as investors, encouraged by signs that Brent crude may settle above $30 a barrel, moved back into a market that has been hit hard by weak oil prices this year.
Many traders and fund managers believe that if Brent trades above $30 – a level investors are keeping a close eye on – then the region’s stock markets may get a temporary boost. Brent traded at $31.80 at 0902 GMT.
Saudi’s benchmark index traded up 1.9 percent, after closing 0.5 higher on Tuesday.
Technical charts suggested that the index has entered a consolidation phase, Riyad Capital said in a note.
Saudi Basic Industries (SABIC), the largest stock by market value, was up 2.3 percent. Other petrochemical stocks also rose. The sub-sector index climbed 2.5 percent.
Small and mid-cap insurance stocks, which are favoured by speculative traders, also advanced, headed for a second day of gains.
“Movements in those illiquid stocks reflects short-term …sentiment,” said a Jeddah-based trader. “If they are up this means traders are calmer, for now.”
Al Othaim, a supermarket and retail operator, traded up 5.2 percent after trimming its year-to-date losses to 2.0 percent. In its fourth quarter results published last week it recorded revenue growth of 19.5 percent year-on-year.
“We believe the key driver of this was both store expansions and strong organic growth,” NCB Capital said in a note, adding that valuations were attractive given the company’s relatively stronger and stable earnings outlook.
In Egypt, the main index was up 1.6 percent.
Orascom Telecom and Amer Group Holding, the two most traded stocks, were up 3.6 and 2.6 percent respectively.