Saudi stocks to benefit as oil gains on Trump’s Iran move

Equity markets in the GCC region are expected to see “indirect” and “positive” impact from US President Donald Trump’s decision to pull his country out of the Iran nuclear deal.

“There is no direct impact on (the region's) stock markets, but an indirect impact due to the movement in oil prices,” Chiradeep Ghosh, manager-research at Securities & Investment Company (SICO) Bahrain, told Argaam.

Crude oil prices have jumped following the US announcement, with the global benchmark Brent Crude last trading up nearly 3 percent at $77 per barrel.

Meanwhile, Saudi Arabia’s Tadawul All Share Index (TASI) opened in the green on Wednesday.

The main index rose 0.2 percent, before giving up gains and declining 0.1 percent within the first half hour of trading.

Petrochemicals heavyweight SABIC opened higher by 0.1 percent at SAR 114.2.

According to Ghosh, it is not just the oil-linked petrochemical stocks that stand to benefit from the rise in crude prices, but all equities ranging from banks to construction will be see a positive impact.

“Overall, it is positive for stock markets,” he said. “Because directly or indirectly everybody in the region benefits from higher oil prices.”

The trade ties between GCC states and Iran are minimal and, therefore, an economic impact of re-imposition of sanction on Tehran will be negligible on the region, Ehsan Khoman, head of research (MENA) at MUFG told Argaam.

“GCC equities appear broadly unfazed by the hard exit Trump announcement overnight, with investor attention back on fundamentals,” he said.

The UAE markets, which are usually more exposed to global events, were mixed on Wednesday. Dubai’s DFM general index fell 1 percent as blue chip Emaar Properties declined 2.5 percent.

Abu Dhabi’s key index was up 0.3 percent, supported by gains by banking major First Abu Dhabi Bank.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com