Saudi stock market breaks three-week losing streak

Shares in Saudi Arabia have dropped in recent weeks, prompting the State purchasing Fund, news that boosted the market on Saturday. Photo: Reuters

Saudi Basic Industries Corp., manufacturer of petrochemicals most climbed 9 1pc, and Al Rajhi Bank, lender of the Kingdom, jumped 7 FP6.

The Tadawul all share index, Monte 7 3pc, the steepest gain since November 2008, at 5,709.91 at the close to Riyadh. The gauge snap a losing stria of 13 days, the longest predatory from a similar period in July 1996.

The increase in oil prices will boost the "strong condition" of the Kingdom, the Finance Minister Ibrahim al-Assaf said Al Arabiya TV.

Shares in Saudi Arabia, which makes comments 20pc of proven reserves of oil, are now attractive and retirement agency public Saudi bought shares last week, he said.

The General Organization of the State social insurance also bought stocks, according to Fuad Aghabi capital Ajeej.

"The Assaf comments have had the greatest impact on the market," said Aghabi, Director of investment Ajeej Capital in Riyadh.

Stocks fell across the region last week, sending shares of Bloomberg GCC 200 Index of the Persian Gulf level lowest since 2009 and propel the benchmark Saudi down the most in two years, on concerns that the turmoil in Libya is spreading across the Middle East.

"With my confidence in the economy and this country, I also took the opportunity" and bought shares, said Finance Minister Al Assaf. "I am an investor in the long term."

Rose oil 2 5pc to a maximum of 29 months yesterday. Crude oil for April delivery rose $104.42 per barrel on the New York Mercantile Exchange, the highest settlement since September 26, 2008.

Shia Muslims in the Eastern province of Saudi Arabia held two events on 3 March to call for the release of prisoners, a rare event in the top world oil exporter.

Department of the Interior said that demonstrations, marches Saudi and the sit-in is "strictly" prohibited by virtue of the laws of the Kingdom, reported the official Saudi press agency, quoting an unidentified Ministry official.

"Comments of the Minister of Finance contributed today to transform the concern of internal unrest," said Aghabi capital Ajeej.

"It remains to see if sentiment will continue to be positive in course of the week".

Saudi Arabia is the only Gulf Arab scholarship open on Saturday.

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Aussie dollar breaks the buck as Australia, India fight Fed with 'quantitative tightening'

 The surging 'Aussie' captures the shift in the world's economic centre of gravity to the Pacific region. It was worth half a US dollar nine years ago. Photo: AFP

The long-awaited moment of "triple parity" seems imminent. The Swiss franc is already worth more than a greenback, and the Canadian dollar is seemingly poised to break through as well.

The surging "Aussie" - widely seen as a play on the China growth story and used by traders as a proxy for the Chinese yuan - captures the shift in the world's economic centre of gravity to the Pacific region. The currency was worth half a US dollar just nine years ago.

Australia's reserve bank said the "the economy is now subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity. The risk of inflation rising again over the medium term remains".

The move caught markets off guard. Credit growth has been cooling off over recent weeks and inflation is still just at 2.8pc - compared to 3.1pc in the UK - but the bank appears concerned about the risk of a wage spiral.

HSBC said emerging markets and commodity exporters such as Australia are opting for "quantitative tightening" to offset the liquidity effects of quantitative easing in the US, which is causing a flood of money into faster growing economies. Several states are toying with capital controls.

India's central bank has also tightened further, raising rates a quarter point to 6.25pc. It has imposed draconian housing curbs to reduce "excessive leveraging" and prick the bubble, limiting mortgages to 80pc of property values.

It may have responded with too little too late.

"Interest rates have been negative in real terms for 26 months, and heavily negative for several months," said Maya Bhandari from Lombard Street Research.

"Inflation is 9.8pc and is is going to get worse as the Fed's QE2 pushes up food prices, so a quarter point rate rise is not going to make much difference. They are relying on `administrative measures' instead of doing what they need to do," she said.

Ms Bhandari said the authorities had let rip with a "huge monetary and fiscal boost" before the elections in May 2009, leaving a legacy of overheating that is now coming back to haunt. The combined central and state budget deficit - including fuel subsidies - is nearly 11pc of GDP.

HSBC's currency team said the Australian dollar may be nearing its peak. "One concern relates to the deflating of the property bubble in China. This could happen gently but, if not, the Aussie will not avoid the fall-out. A sharp fall in Chinese property prices may very well lead to a deep examination of Australia's property bubble, and Australian banks," they wrote in a client note.

The report said Australia's lenders rely heavily on funding from abroad to finance the country's internal boom, creating a risky mismatch in liabilities. "Rationally or irrationally, this could turn very sour. The Aussie party looks set to come to an end soon," it said.

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