Saudi Arabian shares climbed the most in 18 months, led by petrochemicals and helped by oil prices. Saudi Basic Industries Corp., the world's largest petrochemical maker, and Saudi International Petrochemical Co., or Sipchem, helped lift the Saudi Tadawul All Share Index 5.35 percent, the biggest gain since Nov. 2008, to 6175.96. “After a substantial drop last week, some investors are re-entering the market as bargain hunters,” said John Sfakianakis, chief economist at Banque Saudi Fransi. “Oil prices have remained above $70, which is seen as good news for petrochemicals and the overall index.” The Tadawul index on May 25 plunged 6.8 percent, the biggest drop since November 2008, to 5,760.33. Crude oil fell on Friday after a decision by Fitch Ratings to strip Spain of its AAA credit grade pushed the euro lower. Crude oil for July delivery fell 58 cents, or 0.8 percent, to settle at $73.97 a barrel on the New York Mercantile Exchange. Saudi Arabia holds 21 percent of the world's proven oil reserves. SABIC surged for a second day, adding 10 percent, the biggest rise since November 2008, to SR88. Saudi Kayan Petrochemical Co. rose 10 percent, the biggest gain since Oct. 2008, to SR18.2. Sipchem jumped the most in 19 months, climbing SR1.9 to SR21. Yanbu National Petrochemicals Company, or Yansab, surged 9.3 percent to SR38.8. The recent sell-off in Gulf markets offers attractive opportunities in the petrochemicals and consumer sectors in Saudi Arabia, according to a fund manager for Swiss-based asset manager GAM Holding. “Petrochemicals are a great story in Saudi. You have got SABIC down at its lowest levels for a while. If prices stabilise, it is an attractive time to be looking at stocks in this area,” said Sean Taylor, GAM frontier markets fund manager. A drop in oil prices and the euro zone crisis led to a sharp fall in most Gulf markets in May, mirroring similar drops in global markets. Saudi Arabia's benchmark index is down 15.2 per cent in the past month after outperforming most regional markets throughout the year. Saudi Basic Industries Corp (SABIC) shares are off 24 percent so far this month, in line with the Saudi petrochemicals index which has fallen 23.4 per cent. Taylor said Yanbu National Petrochemical (Yansab), an affiliate of SABIC, was also a stock he was looking at in the petrochemicals sector, saying the company could see strong earnings growth as it expands operations. Tadawul is the only Gulf stock market that trades on Saturday.
