Oct 12 Saudi Arabian petrochemical shares may continue rebounding on Monday on the back of firm oil prices and global equities, although most of the Gulf looks set to stay sluggish.
Brent oil edged up a further 0.7 percent to $53.0 a barrel in early Asian trade on Monday, extending a strong rebound that has encouraged investors to return to Saudi petchems since late last week. Gulf oil officials sounded bullish at a conference in Kuwait on Sunday evening, and Qatar’s energy minister declared the oil price had bottomed out.
Analysts’ valuations suggest petchems’ rally could run further. For example, Saudi Basic Industries climbed 3.2 percent to 89.25 riyals on Sunday but analysts’ median target price for the stock is 106 riyals, according to Thomson Reuters data.
The median target for Saudi Kayan, last at 9.60 riyals, is 10.65 riyals; for PetroRabigh, last at 17.95 riyals, it is 20.30 riyals.
The outlook for the overall Saudi stock market is more uncertain; the index rose 1.9 percent to 7,827 points in active trade on Sunday but is now testing technical resistance at 7,812-7,953 points, its highs in September and at the end of August.
One stock which could attract interest is telecommunications operator Mobily, whose shares will resume trading after a one-day suspension pending its response to preliminary decisions of the market regulator’s Committees for the Resolution of Securities Disputes.
Mobily said late on Sunday that the committee had rejected investors’ demands for compensation for losses suffered as a result of the company’s restatements of its earnings. This may be taken as positive news by investors, though the company’s legal and business problems are not over.
Elsewhere in the Gulf, trading volumes have mostly been moderate in recent days as investors remain preocuppied by the prospect of an economic slowdown in the region next year, and by a tightening money market environment for banks. This suggests the strength in global equities may not boost Gulf bourses much on Monday.
Reuters
