Saudi Arabia’s benchmark equity index soared by more than 7% in trading on Saturday, its largest daily gain in more than two years. The index has added another 4% in trading since.
Still, the oil-rich kingdom’s market is among the worst performing in the region so far this year; before the recent gains the index touched a two-year low after falling for 13 consecutive sessions. Investor unease stems from the popular unrest gripping the Middle East and North Africa, with particularly pronounced selling in Saudi Arabia last week as violent protests took place in neighbouring Bahrain and Oman.
The recent rally in Riyadh is attributed to opportunistic buyers, including official investors like the country’s public pension agency. Comments from finance minister Ibrahim al-Assaf over the weekend also helped: given attractive share prices, “I seized the opportunity to buy some shares,” he said. Some US$36bn in new spending on housing and unemployment programmes was pledged by the kingdom last month, with a view to warding off potential unrest. Speculation that further reforms may include passage of a long-delayed mortgage law has seen banks’ shares lead the recent rally.