Saudi shares rise after central bank raises lending limit

Saudi Arabian stocks rose early on Monday after the central bank raised banks’ loan-deposit ratio, while a rebound in global markets helped to lift Egypt’s bourse.

The Saudi central bank, seeking to ease tightening liquidity caused by low oil prices, increased the ratio of deposits that commercial banks can lend to 90 per cent from 85 per cent, industry sources told Reuters .

That may not make much difference in the long term to the pressures on Saudi banks, which face deteriorating credit quality as the economy slows as well as demands on their funds from heavy government bond issuance. The three-month Saudi interbank offered rate edged up on Monday to 1.73125 per cent from 1.72875 per cent.

But the central bank’s move was a welcome effort by authorities to support the sector, and the Saudi banking stock index climbed 1.7 per cent in the opening minutes.

The overall Saudi equities index rose 0.9 per cent as petrochemical giant Saudi Basic Industries gained 1.2 per cent.

But Arabian Cement dropped 1.1 per cent after it said it was proposing a cash dividend for the second half of 2015 of 2.5 riyals per share, down from 3.25 riyals a year ago.

In Egypt, the stock index gained 0.7 per cent as Asian stocks rallied. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 2.4 per cent.

Beltone Financial soared 10 per cent for the third straight trading day. Commercial International Bank accepted billionaire Naguib Sawiris’s bid to buy its investment arm CI Capital, market sources said on Sunday. Sawiris’s Orascom Telecom plans to merge CI Capital with Beltone. Orascom rose 1.9 per cent on Monday.

Giza General Contracting jumped 11.1 per cent in heavy trade after a disclosure statement showed a purchase of 1.17 million shares in it by a related party.

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