MIDEAST STOCK MAR­KETS

Kuwait Times - - BUSINESS -

Stock mar­kets in the Gulf pulled back yes­ter­day as in­vestors turned their at­ten­tion to an ex­pected US in­ter­est rate hike today and the up­com­ing Saudi Ara­bian state bud­get for 2017. In Riyadh, the in­dex de­clined for a sec­ond straight ses­sion, fall­ing 0.8 per­cent. Trad­ing vol­ume shrank by roughly half from Mon­day’s very large amount. In­vestors have been read­just­ing their port­fo­lios in an­tic­i­pa­tion of the 2017 bud­get an­nounce­ment, which is ex­pected late this month. Bankers and an­a­lysts in touch with Saudi eco­nomic of­fi­cials say the 2016 deficit is likely to have shrunk much more than orig­i­nally pro­jected, and this plus higher oil prices should give the gov­ern­ment room to spend a lit­tle more on eco­nomic de­vel­op­ment projects next year.

But more do­mes­tic fuel sub­sidy cuts still look likely in the 2017 bud­get. Mo­ham­mad Al-Sham­masi, chief ex­ec­u­tive of Riyadh-based Der­ayah Fi­nan­cial, said the mar­ket’s up­trend was paus­ing tem­po­rar­ily, though any pull­back in the leadup to the bud­get an­nounce­ment would not be ma­jor. “The gov­ern­ment had al­ready made it clear in last year’s bud­get an­nounce­ment that there will be fur­ther sub­sidy cuts, but I don’t think the im­pact will be as neg­a­tive on sen­ti­ment as it was then.” Nev­er­the­less, yes­ter­day petro­chem­i­cal shares re­mained weak, with all 14 listed pro­duc­ers re­treat­ing. Saudi Kayan Petro­chem­i­cal closed 1.7 per­cent lower. Re­tail shares were also hit, with ap­parel re­tailer and mall op­er­a­tor Fawaz Al­hokair slump­ing 5.5 per­cent.

But Knowl­edge Eco­nomic City rose 1.5 per­cent in heavy trade af­ter the com­pany said it had sold land to hospi­tal op­er­a­tor Mouwasat for a cap­i­tal gain of 32 mil­lion riyals ($8.5 mil­lion), which would be re­flected in its fourth-quar­ter re­sults. Mouwasat fell 0.2 per­cent.

In Egypt, the in­dex pulled back 0.5 per­cent in a volatile ses­sion, with sell­ing pres­sure es­ca­lat­ing in the fi­nal hour. A lit­tle over 80 per­cent of shares in the in­dex de­clined with Oras­com Telecom, the most heav­ily traded stock, fall­ing 2.6 per­cent af­ter ris­ing by the same per­cent­age on Mon­day. For­eign in­vestors, who have been buy­ers of stocks since the cen­tral bank floated the Egyp­tian pound on Nov. 3, re­mained net buy­ers, bourse data showed. The Egyp­tian pound hit an all-time low against the US dol­lar on Mon­day, trad­ing at 18.50 pounds. A weaker cur­rency will hurt lo­cal traders who have seen their pur­chas­ing power erode, but it may en­cour­age in­ter­na­tional funds to con­tinue buy­ing shares at a cheaper ex­change rate.

UAE DOWN, QATAR UP

Dubai’s main in­dex, which rose on Mon­day to its high­est level this year and above tech­ni­cal re­sis­tance on its Au­gust peak of 3,624 points, pulled back 0.9 per­cent to 3,625 points. Trad­ing vol­ume shrunk by roughly a fifth from the pre­vi­ous ses­sion but held well above this year’s av­er­age, sug­gest­ing for­eign in­vestors re­main in­ter­ested in the mar­ket. Mo­bile phone op­er­a­tor du fell 2.8 per­cent and real es­tate gi­ant Emaar Prop­er­ties dropped 1.3 per­cent. But GFH Fi­nan­cial Group jumped 3.2 per­cent in heavy trade af­ter mul­ti­lat­eral de­vel­op­ment bank Arab Petroleum In­vest­ments Corp bought 30 per­cent of Fal­con Ce­ment Co, Bahrain’s largest ce­ment pro­ducer, from GFH. The com­pa­nies did not dis­close a pur­chase price but GFH has pre­vi­ously val­ued Fal­con at $120 mil­lion.

Abu Dhabi’s in­dex closed down 0.2 per­cent but well above its ses­sion low. Trad­ing vol­ume shrank by roughly two-thirds from Mon­day. The main drag came from blue chips with Union Na­tional Bank clos­ing 1.1 per­cent lower.

Qatar’s main in­dex, how­ever, bucked the re­gional down­trend to climb 0.7 per­cent in mod­est vol­ume. The in­dex is still down 0.5 per­cent since the start of the year but has gained 7.9 per­cent since Nov. 29. A Reuters sur­vey of fund man­agers, pub­lished at the end of last month, found more re­gional funds pre­pared to re­turn to Qatar be­cause of at­trac­tive div­i­dend yields. Qatar Na­tional Bank, the largest listed stock, was the top per­former yes­ter­day, ris­ing 2.4 per­cent. —Reuters

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