Saudi Stocks Hit Highest Level Since 2008 Over Earnings, Oil

Saudi Arabian stocks closed at their highest level in more than 13 years, boosted by positive earnings announcements and higher oil prices.

The benchmark Tadawul All Share Index climbed 0.8% on Monday, closing at the highest level since January 2008. The gauge rose for an 11th session, the longest winning streak in about a year.

Al Rajhi Bank, which reported earnings on Sunday, led gains on the benchmark, rising 3.4%. Saudi National Bank and Saudi Basic Industries Corp. were among other key leaders.

There are “structural factors such as a growing mortgage market, shift into organized sectors, more listed companies with different economics and better liquidity all translating to better returns for the Saudi stock market,” according to Mazen Al-Sudairi, head of research at Al Rajhi Capital. Also, Saudi Arabia’s full-year inflation is expected to be higher than bond yields, making stocks a more attractive inflation hedge, he said.

Higher oil prices and government projects, including a program which aims to release 5 trillion riyals ($1.3 trillion) of private sector investment, have also supported shares listed in the kingdom this year.

Saudi Stocks Hit Highest Level Since 2008 Over Earnings, Oil

The benchmark has outperformed emerging-market peers through 2021, but is still about 46% below its record high in 2006, when efforts by the government to use capital markets to help redistribute oil wealth went some way to fueling a speculative bubble driven mostly by retail traders.

A steep crash followed, sparked by several factors including rumors of a crackdown on insider trading and trading limits introduced by the regulator that sparked a wave of panic selling.

©2021 Bloomberg L.P.

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