October 17, 2018 / 8:05 AM / 10 months ago

MIDEAST STOCKS-Saudi moves sideways as instability over Khashoggi case eases

Oct 17 (Reuters) - Saudi Arabia’s stock market moved sideways in a narrow range early on Wednesday as instability related to the disappearance of dissident journalist Jamal Khashoggi eased.

The index was flat after 45 minutes of trade, after swinging widely in the past several days on concern that the international furore over the Khashoggi case could hurt foreign investment inflows.

State-linked Saudi funds appeared to buy blue chips to support the market on Tuesday, fund managers in the region said, and this calmed nervous local retail investors.

U.S. Secretary of State Mike Pompeo’s visit to Riyadh on Tuesday may also have reassured some investors that the case can be resolved without serious damage to the economy. Pompeo said Saudi leaders strongly denied any knowledge of what took place in their Istanbul consulate during a visit by Khashoggi and promised a serious and credible investigation.

Reflecting the more confident mood, the Saudi riyal strengthened slightly in the spot and forward markets on Wednesday.

Shares in National Commercial Bank fell 2.1 percent on Wednesday morning, however, while top petrochemical producer Saudi Basic Industries dropped nearly 1 percent.

Yamama Cement Co fell 1.3 percent after posting a loss for the third quarter as sales dropped because of steep price declines in the domestic market.

Local media reported the government would restore the payment of annual allowances to public sector employees under conditions that prevailed before the allowances were slashed to save money.

The news could indicate a loosening of fiscal policy, but details were not given and an economist at a major Saudi financial institution said the policy would mean only a “very minor” increase in spending.

Qatar’s index rose sharply after hitting on Tuesday its highest level since May 2017. It climbed 0.9 percent to 10,127 points, passing technical resistance just above 10,000 points, where it peaked in August and September this year.

Industries Qatar rose 2.8 percent, while Medicare Group gained 1.8 percent after its net profit for the first nine months of this year increased.

The Dubai index was up 0.6 percent, helped by real estate firms. Dubai Islamic Insurance advanced 3.2 percent after saying it was raising its foreign ownership ceiling to 49 percent from 25 percent. (Reporting by Abinaya Vijayaraghavan in Bengaluru; Editing by Andrew Torchia)

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