Shares of car firms rise as Saudi King allows women to drive
News
By
Reuters
| Sep 28, 2017
Shares of car insurance and rental companies rallied on the Saudi Arabian stock market on Wednesday after news that women would be allowed to drive, although the broader market was flat.
Qatar’s stock market fell sharply, ending a six-day winning streak.
Saudi King Salman on Tuesday issued a royal decree lifting the driving ban; it will be implemented by June 24, 2018, according to state news agency SPA.
There are almost 10 million women, including foreigners, over the age of 20 living in the kingdom, and the driving ban deters many from working. It is not yet clear how the new policy will be implemented, but fund managers were encouraged by Riyadh’s willingness to push the driving reform.
“We believe it is just part a series of changes that will come forth in the coming months, and also believe that these changes will have huge implications for the Saudi economy and some particular sectors such as banking, insurance, retail,” said analysts at Oman-based Ubhar Capital. Among expected reforms, value-added tax is to be introduced in January.
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Shares in most firms that provide auto insurance rose on Wednesday, including Alrajhi Co for Cooperative Insurance, which surged 6.8 percent in its heaviest trade since May.
Car rental company United International Transportation (Budget Saudi) jumped 4.0 percent and car servicing firm Saudi Automotive Services climbed 1.6 percent. Most of the large auto dealers are privately held companies, including Abdulatif Jameel, which owns Toyota in kingdom.
The main Saudi stock index, however, edged down 0.1 percent as investors worried that index compiler FTSE might issue a negative decision when it determines whether to upgrade Riyadh to emerging market status at the end of this month.
Most blue chips, which analysts believe would become members of FTSE’s Secondary Emerging Market Index in the event of a positive decision, were weak, including lender Samba Financial Group, which lost 0.6 percent.
Early this month, investors pushed up Saudi Arabian stocks in the expectation of a positive decision, but rumours that the result might be negative have emerged this week. FTSE will make a similar decision for Kuwait, and many fund managers expect a positive decision in that case.
In Doha, the index dropped 1.7 percent as all but one of the 20 most valuable shares fell; concrete and cement maker Qatari Investors Group lost 6.0 percent.
Non-Qatari Gulf investors, which had been net buyers of stocks over the last few sessions, were net sellers. Foreign funds were also net sellers, bourse data showed.
Dubai’s index was almost flat as 12 shares rose while 19 others declined. The Abu Dhabi index edged down 0.2 percent.
Egypt’s index added 0.3 percent as 17 of the 30 large-caps rose. Local and Arab investors were net buyers, bourse data showed.
On the fiscal side, there was positive news; Finance Minister Amr El Garhy said Egypt would not hike prices on fuel products during the current fiscal year that began in July.
On the monetary side, Egypt’s central bank is likely to keep key interest rates unchanged in its monetary policy meeting this Thursday, a Reuters poll showed, after a slide in inflation that is expected to continue in the last quarter of 2017.