Region loses some post new year rally

Qatar’s stock market surged yesterday, outperforming the rest of the region for a second straight day as investors bought to secure dividends, while Saudi Arabia lost steam after rising in response to a royal package of handouts to consumers.

The Qatari stock index gained 2.6 per cent and trading volume almost doubled from the previous day as Islamic bank Masraf Al Rayan added 3.2 per cent and Qatari Investors Group jumped by 6.9 per cent.

Qatari companies, which historically pay high dividend yields, are due to announce fourth-quarter or annual dividends in the next few weeks, and yields could be boosted by the drop in stock prices after the economic embargo imposed by four Arab states on Qatar.

The embargo has driven up funding costs for Qatari banks and some importers, but recent data suggests that long-term economic growth will suffer only moderately. The Qatari index has now rebounded to within 10 per cent of its pre-embargo level, having plunged 22 per cent at one stage.

In Saudi Arabia, the index edged down 0.1 per cent, after gaining 0.6 per cent on Sunday in response to King Salman’s 50 billion riyal of measures to help citizens cope with the rising cost of living. The package looks likely to help the economy to avoid recession this year, though higher gasoline prices and this month’s introduction of value added tax could drag on growth.

Consumer electronics retailer United Electronics, however, rose 2.7 per cent after saying fourth-quarter net profit is estimated to have climbed to 57.6 million riyals from 26.3m riyals a year ago.

Car hire company Budget Saudi rose 2.2 per cent. The stock has soared 10 per cent in the past four trading days, partly in anticipation of Saudi women being allowed to drive later this year.

The Dubai index gained 0.6 per cent as amusement park operator DXB Entertainments rose 1.6 per cent and builder Arabtec climbed 1.9 per cent.

Builder Drake & Scull, the most havily traded stock, rose in early trade but closed 0.4 per cent down at Dh2.29 after saying it had completed restructuring its corporate bank debt and had secured new credit lines and working capital facilities for its projects.