Saudi Arabia's benchmark stock index rose the most in two weeks yesterday, led by banks, petrochemicals and telecoms companies, amid optimism about fourth-quarter earnings and gains in US equities.
Al Rajhi Bank, the kingdom's biggest bank by market value, climbed to its highest levels since January 20. Saudi Basic Industries, known as Sabic, advanced the most in more than two weeks, while Saudi Telecom increased the most in a week.
The Tadawul All Share Index added 0.39 per cent to 7,025.30 at the close in Riyadh, the biggest gain since January 12.
"Investors are optimistic after the release of annual preliminary results of companies last week," Turki Fadaak, the head of research and consultancy at Albilad Investment, said. "This week will give important indications on how investors will behave towards those results."
US stocks rose for an eighth day on Friday, the longest winning streak since 2004. The Standard & Poor's 500 Index has climbed to the highest level since December 2007 and is poised for a third straight month of gains after advancing 5.4 per cent so far this month.
Energy producers and health care companies have led the US rally, adding at least 7.2 per cent. The S&P 500 is trading at 14.9 times reported earnings, below the average since 1954 of 16.5, data compiled by Bloomberg show.
Al Rajhi Bank increased 0.7 per cent to 69.5 riyals yesterday. Sabic, the world's largest petrochemical maker, rose 0.8 per cent to 93.25 riyals, and STC climbed 2.2 per cent to 41.8 riyals.
Saudi's Tadawul All-Share Index is the only Arabian Gulf bourse operating on Saturdays.
Ibrahim Alassaf, the Saudi finance minister, said last week the country could maintain its current high level of government spending for years to come. Asked whether growth in such spending was sustainable, Mr Alassaf said: "We have the Ö ability to continue this scale of spending.
"We have the reserves, as well as we are reducing our debt almost to zero. So we can continue in the medium term and even beyond that."
The world's leading oil exporter has set state budget expenditure of 820 billion riyals (Dh803bn) for this year, 19 per cent higher than the amount initially budgeted for last year. It is slightly below the record estimated 853bn riyals that the government actually spent last year.
* Bloomberg News