Tadawul profit-taking on FTSE continues

Saudi Arabia’s stock market closed down yesterday, falling for a third straight day after FTSE Russell decided last week to upgrade the bourse to emerging market status. The rest of the region was mixed.

The Saudi index shed 0.2 per cent in active trade, which analysts attributed to moderate profit-taking after a monthslong surge preceding FTSE’s decision.

The biggest contributor to the index’s drop was property developer Dar Al Arkan, down 5.4 per cent. Saudi Telecom, which analysts at NCB Capital said was likely to be hurt this year by regulatory changes scrapping a ban on internet telephone calls, dropped 1.3 per cent.

Al Rajhi Bank, which attracted hundreds of millions of dollars of fresh foreign money earlier this year on expectations that it would be a major constituent of the FTSE index, slipped in early trade but rebounded to close up 0.5 per cent.

Most fund managers believe FTSE inclusion is a long-term positive for Saudi stocks as interest in the market from abroad remains high, but say many stocks are fully valued for now.

STC, for example, is trading at over 16 times trailing earnings.

Foreign investors bought a net $301 million of stocks last week, the third highest total on record, according to exchange data released on Sunday.

The Dubai index dropped 0.9 per cent, weighed down by a 2.6 per cent drop by Emaar Properties to a 23-month closing low amid long-standing concern about the local real estate market outlook. Neighbouring Abu Dhabi’s index closed roughly flat.

Bahrain’s bourse fell 0.7 per cent, largely ignoring the government’s announcement on Sunday that it had discovered the country’s largest oilfield in decades. Details were not provided.

In Kuwait, the market was divided into three segments on Sunday as part of reforms designed by the exchange to boost liquidity and attract more foreign money: the premier market, the main market and the auction market.

The index of the premier market, home to the largest and most liquid companies, fell 1.0 per cent.

Egypt’s blue chip index rose for a sixth straight day, buoyed by last week’s interest rate cut.