Egypt stocks fall amid Brother­hood probe; Saudi eq­ui­ties re­treat


Egypt's stocks dropped, spurred by con­cern as­sets owned by the chair­man of the na­tion's big­gest pro­ducer of pack­aged milk could be na­tion­al­ized af­ter the gov­ern­ment as­sess his ties to the Mus­lim Brother­hood. Saudi eq­ui­ties also de­clined.

Egypt's EGX 30 In­dex de­clined 2.1 per­cent to 7,712.72 at 1:07 p.m., the low­est level in a month af­ter Juhayna Food In­dus­tries tum­bled 7.5 per­cent, the big­gest de­cliner by per­cent­age points. In Saudi Ara­bia, the Tadawul All Share In­dex de­creased 2 per­cent led by Ja­bal Omar De­vel­op­ment Co.

Chair­man Safwan Tha­bet's as­sets were frozen by a com­mit­tee in charge of in­ves­ti­gat­ing the Mus­lim Brother­hood, which the gov­ern­ment la­bels a ter­ror­ist or­ga­ni­za­tion. Juhayna isn't im­pacted by the de­ci­sion, it said in a state­ment last week.

"I am sure there will be an ap­peal, but the big­ger worry is that if it will lead to na­tion­al­iz­ing of stake, that's what peo­ple are wor­ried about," Allen San­deep, Cairobased di­rec­tor of re­search at Naeem Bro­ker­age, said by tele­phone in Cairo. "If in­vestors are wor­ried about na­tion­al­iza­tion then the ques­tion is who will be the new man­age­ment and will na­tion­al­iza­tion be per­ceived as a good thing."

Saudi Ara­bia is OPEC's big­gest ex­porter, and the na­tion re­lies on oil for about 90 per­cent of its rev­enue. Brent crude sank to $49.03 a bar­rel on Fri­day. "Mar­ket fun­da­men­tals are weak along with the a neg­a­tive out­look of oil prices," Mo­hammed Al-Suwayed, the head of cap­i­tal and money mar­kets at Adeem Cap­i­tal said by phone from Riyadh.

Kuwait's gauge re­treated 0.6 per­cent, while Bahrain's fell 0.2 per­cent. Oman's MSM30 In­dex lost 0.4 per­cent.

In Dubai, the DFM Gen­eral In­dex fell to the low­est since May 31 af­ter the United Arab Emi­rates' big­gest pub­licly-listed builder re­ported a third straight quar­terly loss. Arabtec Hold­ing Co. slumped 5.4 per­cent in Dubai to 2.11 dirhams, the low­est since March 26, bring­ing the de­cline this year to 24 per­cent, com­pared with a 4.2 per­cent gain for Dubai DFM gauge. Abu Dhabi's ADX Gen­eral In­dex re­treated 1.3 per­cent.

Arabtec, which helped build the world's tallest tower in Dubai, posted a 718.4 mil­lion-dirham loss ($196 mil­lion) in the last quar­ter, com­pared with a profit of 102.4 mil­lion dirhams a year ear­lier, as costs in­creased. Three of the com­pa­nies' top ex­ec­u­tives quit last month as part of a re­or­ga­ni­za­tion plan to re­duce costs.

Ris­ing costs "in­di­cate that they have been too ag­gres­sive in pick­ing and pric­ing some of the projects," said Se­bastien Henin, who over­sees $90 mil­lion at The Na­tional In­vestor in Abu Dhabi. "Now they are think­ing of pro­ject re­views, which means the Arabtec saga con­tin­ues."

Last month's res­ig­na­tions came 13 months af­ter Chief Ex­ec­u­tive Of­fi­cer Hasan Is­maik quit and sev­eral top man­agers were dis­missed amid spec­u­la­tion the com­pany was los­ing gov­ern­ment back­ing. The shakeup sparked a sell­off in Dubai's bench­mark in­dex, send­ing the DFM gauge tum­bling more than 20 per­cent in June 2014. The com­pany ac­counts for about 5 per­cent of the in­dex. Arabtec's loss is "adding to al­ready bear­ish sen­ti­ment in the mar­ket," said Henin, who said he will re­main cau­tious about trad­ing the stock un­til there's clar­ity on the sta­tus of the com­pany's projects and its fi­nances.

U.A.E. eq­ui­ties will see pas­sive out­flows of $17 mil­lion af­ter the coun­try's weight­ing was re­duced one ba­sis point to 0.83 per­cent on MSCI Inc.'s Emerg­ing Mar­kets In­dex, Cairo-based in­vest­ment bank EFG-Her­mes Hold­ing SAE said last week.

First Gulf Bank PJSC lost 1.7 per­cent, poised for a fourth day of losses and lead­ing declines in Abu Dhabi. The bank ac­counts for 27 per­cent of Abu Dhabi's in­dex of eq­ui­ties. Abu Dhabi Com­mer­cial Bank PJSC and Na­tional Bank of Abu Dhabi PJSC also headed for at least the third day of losses.

Qatar's QE In­dex ad­vanced 0.1 per­cent, led by Ez­dan Hold­ing Group. Qatar's weight­ing in MSCI's emerg­ing mar­kets in­dex will in­crease and the mar­ket will see "sig­nif­i­cant in­flows" fol­low­ing the in­dex provider's quar­terly re­view, EFG-Her­mes said. Ez­dan and the Com­mer­cial Bank QSC will at­tract a com­bined $138 mil­lion of pas­sive in­flows, it said.

Is­rael's TA-25 In­dex gained for a sec­ond day, adding 0.4 per­cent to 1,718.70. The cab­i­net may de­cide on the reg­u­la­tory frame­work for nat­u­ral gas fields on Sun­day, which was al­ready agreed upon last week by the de­vel­op­ers and the energy min­istry. Delek Drilling-LP and Avner Oil Ex­plo­ration-LP, part­ners in the Le­viathan and Ta­mar off­shore nat­u­ral gas fields, in­creased 2.3 per­cent and 1.7 per­cent, re­spec­tively.

"There is op­ti­mism in the mar­ket that the terms and con­di­tions of the gas frame­work that is be­ing voted on to­day will be even more in fa­vor of the gas com­pa­nies," Steven Shein, a trader at Psagot In­vest­ment House Ltd. in Tel Aviv, said by phone. The yield on the coun­try's 1.75 per­cent bonds due Au­gust 2025 fell one ba­sis point to 2.26 per­cent af­ter ris­ing as much as seven ba­sis points ear­lier to­day.

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