Saudi Arabia’s stock market may rise Thursday as investors cheer the kingdom’s mammoth international bond sale, which could help to unclog liquidity bottlenecks in the economy, while an overnight surge in oil prices may aid regional markets.
The kingdom conducted the largest-ever emerging market bond sale on Wednesday, selling $17.5 billion of debt in the government’s first international offer while attracting investor orders totalling almost four times that amount.
Demand was larger and pricing tighter than expected. London-based Capital Economics estimated the issue would finance around a third of next year’s state budget deficit and almost all of the kingdom’s current account gap, meaning its foreign exchange reserves were unlikely to fall much further in coming years.
Subsequently, Finance Minister Ibrahim Alassaf said in a televised interview that state payments to construction firms would increase in the coming period and that delays in the payments were merely due to “technical reasons”.
Saudi Arabia’s general market index is one of the worst-performing in the world so far this year; it is down 20.1 percent year-to-date, suggesting some room for recovery if sentiment improves.
Saudi Electricity Co may attract interest on Thursday after reporting a 50.8 percent jump in third-quarter net profit to 4.40 billion riyals ($1.17 billion); NCB Capital had forecast 1.90 billion riyals.
However, the second-largest telecommunications operator, Etihad Etisalat (Mobily), may drop after it missed analysts’ estimates by a large margin. The company ended three straight quarters of profits and made net loss of 167.7 million riyals, compared with a loss of 158.3 million riyals in the prior-year period; analysts had forecast Mobily would make a quarterly net profit of 15.06 million riyals on average.
Rival Saudi Telecom Co also reported lower profits in the third quarter. It made a profit of 2.15 billion riyals, down 7.5 percent but in line with expectations.
Saudi International Petrochemical (Sipchem) missed estimates with a net loss of 59 million riyals versus a net profit of 71.6 million riyals a year earlier. The average forecast of three analysts had been for a 30.6 million riyal profit.
But shares in other petrochemical producers may remain firm as Brent futures rallied almost 2 percent on Wednesday because of a drawdown in U.S. inventories and expectations for an OPEC-led cut in production.
Construction firm Abdullah Abdul Mohsin al-Khodari and Sons reported a wider third-quarter net loss of 47.76 million riyals, compared to loss of 14.3 million riyals in the year-earlier period; EFG Hermes had forecast a loss of only 19.5 million riyals.