Saudi Stocks Lead Mideast Higher as Oil Extends Gains: Inside EM

Saudi Arabia’s equities index extended a winning streak to five sessions Sunday, following another positive week for crude prices.

The Tadawul All Share Index climbed 0.9%, with gauges in Bahrain, Oman, Kuwait, Qatar and Israel also rising. The index in Dubai finished little changed while Abu Dhabi’s slipped 0.2% and Egypt’s EGX 30 declined 0.9%.

Oil, the main export for Gulf countries, posted its third straight weekly rise on improving demand, with the International Energy Agency warning the market will need extra supply next year. Brent crude futures rose 1.1% for the week that ended June 11 to $72.69 per barrel, the highest since April 2019.

As Saudi stocks keep rising, a technical measure shows the Tadawul All Share Index has been trading in overbought territory for the past two weeks. The gauge is up about 25% for the year, versus a 7% advance for the MSCI Emerging Markets Index.

Saudi Stocks Lead Mideast Higher as Oil Extends Gains: Inside EM

Israel’s TA-35 rose as much as 0.9%, heading for its third day of increases, as lawmakers are set to vote on a coalition that has conflicting ideologies but is united in ousting Prime Minister Benjamin Netanyahu. The index is up 14% this year.

HIGHLIGHTS:
  • The MSCI Emerging Markets Currency Index rose 0.2% last week, the fourth consecutive week of increase
  • EM Review: Lira Rallies Ahead of Turkey and U.S. Meeting
  • MORE: Israel to Vote on Fragile Coalition to End Long Netanyahu Rein

MIDDLE EASTERN MARKETS:

  • Al Rahji Bank climbed 0.9% to the highest since April 2006

    • The lender boosted the Tadawul’s main index the most by points
  • Astra Industrial Group fell 3.5%, the most since February, even after its fully owned unit Tabuk Pharmaceuticals partnered with Moderna to commercialize Moderna’s Covid-19 vaccine in Saudi Arabia
    • Astra Industrial shares climbed 27% last week, the biggest weekly advance on record
  • Dur Hospitality rose 0.6% while Taiba Investment ended little change

  • Jabal Omar, which owns hotels in the holy city of Mecca, fell 0.8% after Saudi Arabia said it will only allow nationals and residents to attend the annual Hajj pilgrimage for the second year in a row, seeking to contain the spread of the coronavirus and its variants
    • NOTE: Flagship hotels owned by Jabal Omar in Mecca include the Marriott, Hilton Suites, Hyatt Regency and the Conrad, all at privileged locations near the Grand Mosque
  • Kuwait’s Premier Market Price Index rose 0.3%, the 10th increase in eleven sessions
  • Weakening credit quality suggests the top 10 UAE lenders’ nonperforming loans could increase by at least 2-3 percentage points, Bloomberg Intelligence analyst Edmond Christou writes
    • Cost of risk of 140 basis points to drive loan restructuring at large-to-mid-sized accounts and impairment risk for smaller credit
    • READ: UAE Banks’ 2H Focus Is Lower CoR, Better Credit Yields, Growth
  • MORE: Iran Casts Doubt on Reviving Nuclear Deal Before Its Election

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