Saudi Arabian Stocks Resume Gains After Holiday, Led by Sabic

By Anthony DiPaola

Dec. 13 (Bloomberg) -- Saudi Arabian stocks rose as the bourse reopened following the Eid al-Adha religious holiday, led higher by Saudi Basic Industries Corp. on speculation the company’s shares are cheap relative to earnings.

The benchmark Tadawul All Share Index advanced 190.37, or 4.1 percent, to close at 4,845.25 in Riyadh, as 115 stocks increased, three declined and eight were unchanged on the first day of trading since Dec. 3. The index has gained in three of the four sessions this month, adding 2.3 percent.

Saudi Basic Industries, the world’s biggest chemicals maker by market value also known as Sabic, rallied 9.9 percent to 58.5 riyals today. Saudi Arabian Fertilizer Co., a Sabic unit known as Safco, rose 7 percent to 91.25 riyals.

“Investors are optimistic about the forthcoming quarterly earnings,” Abdulla al-Aqil, a trader at Samba Financial Group, said in a telephone interview from Riyadh. “With the pause in trading people missed much of the bad news in markets. Investors believe Sabic will have a good set of results and that there’s room for the stock to rise.”

Companies in Saudi Arabia will start releasing results at the beginning of January.

Sabic shares currently trade at 6.14 times earnings, compared with the average ratio of 20.65 since January 2002, according to Bloomberg data. The Tadawul All Share Index is valued at 11.01 times its members’ profits.

Sabic’s plastics unit plans to cut about 9.5 percent of its workforce in a sales and marketing reorganization to adapt to rising material costs and falling demand for products. The cuts in Europe, Asia and North America don’t involve the Riyadh-based parent company.

Al-Rajhi Bank, the largest bank in Saudi Arabia by market value, added 5.3 percent to 60 riyals. Alinma Bank, a Shariah law-compliant lender, climbed 5.8 percent to 11.8 riyals.

Al-Qassim Agricultural Development Co., a producer of wheat, dates and dairy products, was the benchmark index’s biggest gainer in percentage terms, adding 9.9 percent to 7.2 riyals.

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net.