September 28, 2017 / 5:51 AM / a year ago

MIDEAST STOCKS-Saudi blue chips may be weak ahead of FTSE decision

DUBAI, Sept 28 (Reuters) - Saudi blue chips may underperform the Riyadh index on Thursday, a day before a decision by benchmark compiler FTSE on whether to upgrade the largest Gulf state to its emerging market status.

On Wednesday the main Saudi stock index largely ignored the historic move by the government to allow women to start driving for the first time next year, as investors focused more on FTSE’s announcement, due at the end of this week.

Most blue chips, which analysts believe would become members of FTSE’s Secondary Emerging Market Index in the event of a positive decision, were weak, and this trend may extend into Thursday as investors worry about the risk of a negative decision.

Many analysts have predictd a positive FTSE decision on Friday for both Saudi Arabia and Kuwait. But rumours in Riyadh this week have suggested a negative decision, and ample Saudi valuations mean the risk-reward ratio may be tilted towards rthe downside.

“The focus today will be to brace for FTSE’s decision on Friday,” said a Jeddah-based portfolio manager.

However, Mecca-based developer Jabal Omar Development may get a boost after the company said it had signed a non-binding agreement to merge with another privately held developer, Umm Al-Qura. Jabal Omar did not give a value for the potential merger, and said each company would hire independent financial advisors to conduct valuations.

Property manager Taiba Holding proposed a cash dividend of 0.4 riyal per share for the third quarter, in line with its payout a year ago.

Other Gulf bourses may be weak as the U.S. dollar’s strength has helped drag down MSCI’s broadest index of Asia-Pacific shares outside Japan by 0.4 percent to one-month lows, and as Brent crude oil has slipped below $58 a barrel. (Reporting by Celine Aswad; Editing by Andrew Torchia)

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