Saudi, UAE mar­kets re­bound af­ter crash


Kuwait Times - - BUSINESS -

DUBAI: Mar­kets in Saudi Ara­bia and the United Arab Emi­rates re­bounded yes­ter­day as some in­vestors bought back stocks at lower prices fol­low­ing a broad sell-off a day ear­lier, but Egypt ex­tended de­clines to hit a new 23-month low. Saudi Ara­bia’s bench­mark had tum­bled to a 35-month low on Sun­day and Dubai’s close was its low­est since last De­cem­ber fol­low­ing an 8 per­cent de­cline in crude bench­marks the pre­vi­ous week that deep­ened a pro­longed oil price rout.

Gulf in­vestors seem to have be­lat­edly re­al­ized that the con­se­quent hit to state fi­nances would also im­pact listed com­pa­nies’ earn­ings, es­pe­cially as most blue chips are at least partly gov­ern­ment-owned, but a slight re­bound in oil prices then con­vinced some to buy back re­gional eq­ui­ties.

“For long-term in­vestors and stock pick­ers, mar­kets have started throw­ing up in­ter­est­ing in­vest­ment op­por­tu­ni­ties,” said Sha­keel Sar­war, head of as­set man­age­ment at Se­cu­ri­ties & In­vest­ment Co (SICO) in Bahrain. Dubai’s in­dex rose 0.9 per­cent. Con­trac­tor Arabtec jumped 8.4 per­cent, al­though it re­mains 84 per­cent be­low a May 2014 peak. The firm’s chair­man said yes­ter­day it had pro­posed build­ing 13,000 homes in Egypt. Abu Dhabi’s in­dex rose 1 per­cent. Al­dar Prop­er­ties , which has re­ported higher prof­its in nine of the past 10 quar­ters, was the main sup­port with a 3.3 per­cent gain.

“I think it’s a bit of a dead cat bounce; the fun­da­men­tals haven’t im­proved from yes­ter­day but peo­ple just felt the drop was too steep,” said Sanyalak­sna Manib­handu, head of re­search at NBAD Se­cu­ri­ties. “It’s a tem­po­rary re­lief. If any­thing neg­a­tive hap­pens by tomorrow morn­ing, we could see more sell­ing.”


The Saudi bench­mark rose 1.1 per­cent to trim its 2015 losses to 16.5 per­cent. Manib­handu said the trig­ger for the re­cent drop in Gulf mar­kets was Stan­dard & Poor’s down­grade of its rat­ings on Saudi Ara­bian sov­er­eign debt on Oct. 30 and Fitch Rat­ings’ re­vi­sion the fol­low­ing week of its out­look for three Saudi banks to neg­a­tive.

“There’s a lot of con­cern the agen­cies will now turn to other Gulf coun­tries in­clud­ing the UAE,” added Manib­handu. Heavy­weights Saudi Ba­sic In­dus­tries Corp (SABIC) and Na­tional Com­mer­cial Bank rose 3.3 and 1.5 per­cent re­spec­tively.

Egypt’s bench­mark fell 0.6 per­cent to its low­est close since De­cem­ber 2013 de­spite gain­ers out­num­ber­ing losers 19 to eight. Com­mer­cial In­ter­na­tional Bank, the Cairo bourse’s largest listed com­pany with a mar­ket value three times that of its near­est ri­val, fell 2.8 per­cent. — Reuters

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