Why Saudi stocks are at five-year high
Gulf share markets were narrowly mixed on Monday, struggling for direction amid a lack of new catalysts, although Qatar’s bourse recovered from a two-week low as bargain hunters returned.
Saudi Arabia’s benchmark climbed 0.1 percent to a new five-year high at 8,562 points after trading flat for most of the session. Petrochemical shares supported the market with the sector’s index up 0.2 percent.
The market showed little reaction to the announcement of the 2014 state budget, which projected spending would rise a modest 4.3 percent from this year’s plan, suggesting the Kingdom was starting to slow expenditure growth after three years of huge increases.
Kuwait’s index also climbed 0.1 percent to 7,635 points. After the close, the Constitutional Court ruled that parliamentary elections held earlier this year were legal, rejecting suits that could have caused the dissolution of parliament and fresh elections.
Later in the day, Kuwait’s cabinet ministers submitted their resignations, a move that could pave the way for a cabinet reshuffle.
The market has become accustomed to political instability and is unlikely to react to any moderate reshuffle.
Elsewhere, United Arab Emirates markets edged up but small caps led trading. Dubai’s index climbed 0.4 percent, leaving it fewer than 10 points away from Thursday’s five-year closing high.
“The market looks like it’s on the verge of a correction - there’s not much buying interest in blue chips,” said Hisham Khairy, head of trading for the institutional desk at MENA Corp.
“People are staying in banks for earnings and dividends. If we don’t see other catalysts, we could have a minor correction until year-end.”
In Qatar, the benchmark rose 0.5 percent to 10,453 points, recovering from Sunday’s two-week low.