Saudi Stocks Enjoy a Strong Start to Year

(Bloomberg) -- Saudi Arabian stocks are enjoying their best start to a year in more than two decades amid improving prospects for oil prices and ahead of their long-awaited inclusion in major global benchmarks.

The main Saudi equities index climbed more than 7 percent in the first 20 days of the year, the best performance for the period since Bloomberg records began in 1995. The increase, more than that of any other major gauge in the Gulf, follows a gain of about 16 percent in the price of Brent crude -- the kingdom is the world’s largest oil exporter.

Saudi Stocks Enjoy a Strong Start to Year

Brent has advanced every week this year amid expectations that production cuts by OPEC and resilient fuel demand will keep global markets in balance, supporting sentiment toward the Saudi economy. Additionally, large caps are rallying ahead of the kingdom’s inclusion in key emerging-market benchmarks compiled by MSCI Inc. and FTSE Russell later this year.

  • Al Rajhi Bank, Saudi Basic Industries Co., Samba Financial Group contributed the most to the index gain in the period. They are expected to join the EM benchmarks.
  • The Saudi gauge’s 120-day correlation with Brent crude has climbed to the highest level since Sept. 2016.
  • The rally prompted the index’s 14-day relative strength to trade in overbought territory for nine straight sessions, the longest since December 2016. The Tadawul All Share Index ended 0.2 percent higher on Monday.

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