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Saudi may be firm before budget, few positive factors elsewhere

International Business
Mon, 18 Dec 2017

Saudi Arabia's stock market may be firm on Monday ahead of the release of government's 2018 budget after the close on Tuesday, but there are few positive factors elsewhere in the Middle East.

Analysts generally expect a moderate increase in spending in the 2018 budget and for the pace of deficit-cutting to slow considerably as the government focuses more on supporting growth; infrastructure spending may rise after two years of austerity.

This looks unlikely to produce a strong economic recovery next year, given the introduction of 5 percent value-added tax at the start of next month and the government's plan to announce fuel price hikes in the first quarter of 2018.

Nevertheless, it has been enough to boost construction-related stocks in recent weeks; the main stock index added 0.3 percent on Sunday as builder Khodari surged 7.6 percent in its heaviest trade since January. Najran Cement gained 4.5 percent and in addition to Khodari, the 10 best-performing stocks featured six cement producers.

This trend may have further to run; Khodari shares have still only returned to their September levels and Najran shares to their July levels.

Last at 7,093 points, the Saudi stock index is technically bullish, having on Sunday again confirmed support on the 200-day average, now at 7,050 points, in active trade.

The global market environment is marginally positive, with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.3 percent and Brent crude up 12 U.S. cents to $63.35 a barrel.

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