MIDEAST STOCKS-Saudi surges as reforms announced, rest of Gulf weak – Reuters

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* Economic reform plan creates positive buzz

* Trading volume highest since last August

* Bank shares are main beneficiaries

* Dubai’s Mashreq bank falls after posting weaker earnings

* Industries Qatar drops on net profit fall

By Celine Aswad

DUBAI, April 25 Saudi Arabia’s stock market recovered from early losses and jumped 2.5 percent on Monday as Deputy Crown Prince Mohammed bin Salman announced an economic overhaul for the oil-dependent kingdom.

He outlined a restructuring of the government’s Public Investment Fund to make it an international investment power, a planned sale of a stake of less than 5 percent in national oil giant Saudi Aramco, a restructuring of the housing ministry to increase supply of affordable housing, and a “green card” system to give expatriates long-term residence.

There were few details, and many analysts said execution of some of the reforms would be difficult. But the stock market was lifted by a sense that the government was acting energetically to address the economy’s problems.

“The main theme of Vision 2030 is to diversify, liberalise and reform the Saudi economy, and the reliance on oil income will gradually fall,” said Shakeel Sarwar, head of asset management at Bahrain’s Securities and Investment Co.

Trading volume climbed to its highest level since August 2015.

“I believe this vision has a lot to offer and am optimistic, but the biggest challenge will be the execution,” said Mohammad al Shammasi, head of asset management at Riyadh-based Derayah Financial.

He said the jump in the stock market might not continue, but noted that other factors had been supporting the bourse’s performance in the last few weeks, including firmer oil prices and generally solid quarterly earnings.

Banking stocks led the market up as the reform plan was announced, since investors think privatisation exercises will benefit institutions with large investment banking operations.

Samba Financial Group, lead underwriter of the recent initial public offer of Middle East Healthcare, rocketed 9.3 percent and National Commercial Bank added 8.2 percent.

DUBAI, QATAR

Elsewhere in the Gulf, Industries Qatar reported a 26.7 percent fall in first-quarter net profit to 697 million riyals ($186 million), against analysts’ average net profit forecast of 748.5 million riyals. Its shares fell 1.8 percent as the main Qatari index dropped 0.8 percent.

Dubai’s third-biggest lender by assets, Mashreq, posted an 18.3 percent fall in first-quarter net profit as it failed to recoup as many bad debts as it did in the corresponding period last year. Shares in the bank, usually thinly traded, were down 1.1 percent.

The Dubai index shed 0.7 percent. Builders Arabtec and Drake & Scull, which have not yet reported quarterly earnings, fell 1.7 and 2.1 percent respectively.

Egypt’s market was closed for a public holiday.

MONDAY’S HIGHLIGHTS

SAUDI ARABIA

* The index jumped 2.5 percent to 6,868 points.

DUBAI

* The index fell 0.7 percent to 3,557 points.

QATAR

* The index dropped 0.8 percent to 10,185 points.

ABU DHABI

* The index added 0.3 percent to 4,633 points.

KUWAIT

* The index fell 0.3 percent to 5,359 points.

OMAN

* The index rose 0.6 percent to 5,926 points.

BAHRAIN

* The index declined 0.2 percent to 1,117 points.

(Editing by Andrew Torchia/Ruth Pitchford)

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