The petrochemical sector re-asserted itself as it accounted for nearly 35 per cent of the index's rise.
Tadawul starts new year up 4.6%
Investors in Saudi Arabian shares greeted the new year with optimism yesterday, lifting the Tadawul 4.6 per cent higher after watching shares lose 57 per cent of their market value during 2008. It was the fifth successive session of gains, with the market index closing at 5,023.22, its highest level since Nov 18. The petrochemical sector re-asserted itself as it accounted for nearly 35 per cent of the index's rise, followed by banks and telecommunications operators.
Saudi Basic Industries Corp, the biggest petrochemical exporter, was the top mover, up more than 7 per cent to 55.25 riyals, followed by Al Rajhi Bank, the largest Islamic lender in the kingdom, which rose more than 4 per cent to 58.5 riyals. It was a good day for virtually all stocks, with petrochemical and banking sectors traded heavily despite concerns over the continuing slump in global petrochemical prices and growing worries about the kingdom's financial companies.
The relentless fall in oil prices has weighed heavily on regional markets for months, but the rise in prices since Tuesday appears to have brought at least some investors back to the trading floor. Ahmed Sharewy, a deputy director at the brokerage house EFG-Hermes in Riyadh, said many investors were starting the year optimistically, believing that equities markets and petroleum prices had reached bottom.
"Many are thinking 'we can't lose any more than we did last year'," Mr Sharewy said, adding the return of some confidence to other markets had encouraged Gulf investors. The US NASDAQ Composite Index, the German DAX and Britain's FTSE 100 have been rising since early last week. Investors also have been reassured by the Saudi government's commitment to maintaining spending. But with oil prices remaining well below the Saudi government's desired target of US$75 and doubts over Opec's ability to curb surplus supply, few believe the losses of last year will be recouped in a hurry.
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