Saudi stocks barely move after oil shipping lane closed by attack

Published: July 26, 2018 16:04:28 | Updated: July 27, 2018 16:18:07


Saudi Arabia’s stock market barely moved early on Thursday after Riyadh reported an attack on two oil tankers by Yemen’s Iran-aligned Houthi movement.

The main stock index edged down 0.3 per cent in the first hour of trading, other Gulf stock markets mostly traded sideways.

Shares in National Shipping Co of Saudi Arabia (Bahri) was 0.2 per cent lower after it said one of its vessels suffered minor damage in the attack.

Oil prices rose only modestly after Saudi Arabia said it was suspending crude shipments through one Red Sea shipping lane because of the attack.

Brent crude futures added 0.9 per cent to $74.59 a barrel on Thursday morning after gaining 0.7 per cent on Wednesday, when the attack reportedly occurred.

Credit default swaps rose marginally on Thursday morning, reports Reuters.

Al Rajhi Bank, Saudi Arabia’s second largest bank by assets, was up 0.5 per cent after reporting a 17.7 per cent rise in second-quarter net profit to 2.57 billion riyals ($685 million), at the high end of analysts’ forecasts.

Saudi Arabian Mining Co (Ma’aden), the Gulf’s largest miner, was 1.2 per cent down despite posting a 45.3 per cent jump in second-quarter net profit.

The results were short of forecasts by SICO Bahrain and EFG Hermes.

Saudi Arabia’s stock index has surged 16 per cent this year as foreign investors anticipate the market’s planned entry into emerging market benchmarks next year.

Many fund managers now view the Saudi market as richly valued, with Saudi Basic Industries Corp (SABIC) valued at over 20 times trailing earnings.

But major Saudi investment bank Jadwa said in a report on Wednesday that the market could rise further in coming months as active foreign funds began entering the market ahead of Riyadh’s entry into MSCI’s emerging market index.

“We view a rise of at least 20 per cent between now and early 2019 as totally plausible,” which would push the stock index to around 10,000 points, Jadwa said.

In Abu Dhabi, where the index slipped 0.2 per cent, First Abu Dhabi Bank fell 1.1 per cent early on Thursday.

On Wednesday the lender reported a 19 per cent year-on-year gain in quarterly profit.

Dubai’s main index was almost flat as Dubai Islamic Bank climbed 0.4 per cent. Qatar’s benchmark was also little changed with Qatar Islamic Bank, the main mover, adding 0.5 per cent.

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