Saudi bourse up on National Transformation Plan approval, other Gulf markets also gain

Saudi Arabia’s stock market edged up in early trade on Tuesday after the government announced details of its economic reform plans.

Monday night’s 110-page reform document contained hundreds of projects and targets, including substantial austerity measures. The government aims to reduce the value of public salaries and wages as a proportion of the state budget to 40 per cent from 45 per cent by 2020, and cut water and electricity subsidies by 200 billion Saudi riyals.

But the austerity steps were largely expected – the market had been falling in previous weeks because of those expectations – and the main stock index was 0.4 per cent higher after 30 minutes of trade.

“The absence of a direct corporate tax and a tax on dividends are both positive catalysts for the Saudi equity market in the short term,” said Mohamed El Jamal, managing director of capital markets at Abu Dhabi’s Waha Capital.

“Sectors that are expected to benefit from the plan are ones linked to religious tourism, private education, mining; whereas sectors like petchems and materials will see their subsidies phased out over the next few years.”

Saudi Arabian Mining Company (Ma’aden) jumped 1.3 per cent. The energy minister said the kingdom planned to issue new licences covering exploration for minerals and to build more industrial cities.

Medical insurer MedGulf, which could benefit from the plan’s intention to develop the medical sector, rose 4.4 per cent in unusually heavy trade.

Retailer Fawaz Abdulaziz Alhokair Company jumped 6.3 per cent after it received an offer from a fund managed by a Dubai-based investment bank to buy its investment in Spanish clothing retailer Blanco for 350 million riyals.

Among materials producers, Al Yamamah Steel slipped 3.4 per cent.

Dubai’s stock index climbed 0.9 per cent, with three quarters of the traded stocks advancing by midday.

Union Properties climbed 3.5 per cent after the company secured a loan to finance development of a mid-to-upscale gated community in Dubai’s MotorCity.

Dubai Parks & Resorts, meanwhile, jumped 4.3 per cent to Dh1.47. Last week HSBC initiated coverage of the company with a “buy” rating and a target price of Dh1.80.

The main Abu Dhabi index rose 0.3 per cent as Abu Dhabi National Energy (Taqa) jumped 3.5 per cent and telecoms company Etisalat, a constituent of the MSCI emerging markets index, gained 1.1 per cent.

In Doha, blue chips pulled the index up 0.9 per cent. Vodafone Qatar and Ezdan Holding were each up by more than 1 per cent.

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