Saudi Arabian stocks rose the most among Gulf equities, poised to extend their longest winning streak in more than two years on investor optimism that the outlook for the kingdom’s banks is improving.
Four of the five biggest contributors to an increase in the Tadawul All-Share Index (TASI) were lenders, as the main gauge added 0.8 percent at 12:41pm in Riyadh. The measure has increased 9.6 percent in eight days, the longest string of gains since 2014, as Saudi Arabia sold the largest international sovereign bond in emerging-market history and said it would boost payments to contractors.
“What we are seeing now is a recovery in banking stocks as a whole, which is supporting the improvement in sentiment,” said Aqib Mehboob, an equities analyst at Saudi Fransi Capital in Riyadh.
“The sector had been beaten down a lot on liquidity concerns and a potential rise in defaults from contractors,” he said. “The bond sale adds liquidity to the local market, and the payment to contractors helps improve expectations regarding increases in nonperforming loans.”
The amount banks charge to lend each other in the largest Arab economy fell for the first trading week in 14 in the five days through Thursday, in a sign the kingdom’s cash squeeze might be easing after the government pledged to inject US$5.3 billion into its financial institutions.
The rate had climbed to the highest since January 2009 as the government withdrew deposits and increased borrowing amid the plunge in oil prices that sent the country’s budget deficit to the widest since 1992.
All but one of the 12 banks and financial service providers listed on the TASI advanced. The Saudi Arabian Monetary Agency, as the central bank is known, on Thursday said it is introducing 90-day repurchase agreements starting this week to “enhance the domestic monetary conditions.”
National Commercial bank rose 8.3 percent, Al Rajhi Bank climbed 1.3 percent and Samba Financial Group advanced 4.2 percent.
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