Saudi stocks dip from two-year highs

Saudi Arabia’s stock index fell back yesterday as many blue chips were seen as fully valued or expensive after the market hit a more than two-year high the previous day.

Other Gulf markets were mixed, with property stocks dragging Dubai lower.

The Saudi index ended 0.2 per cent lower, remaining near levels last seen in August 2015. The index is up 15 per cent this year because of inflows of foreign funds and strong corporate earnings. Saudi Basic Industries and Al Rajhi Bank both dropped 0.3 per cent.

“In terms of broad valuation metrics at a 16 times price-toearnings multiple, it is definitely not cheap, given earnings growth is not yet visible,” Vrajesh Bhandari, portfolio manager at Al Mal Capital in Dubai, said of Saudi Arabia.

“For instance, SABIC at 19 times is a good 15 per cent more expensive than its historical average ratios.

“In fact, I feel most large caps are either full or have built a 5 per cent to 10 per cent froth over their fair market value.”

Dallah Healthcare dropped 3.6 per cent to its lowest close this year after its first-quarter net profit fell 32 per cent.

The company said it was hit by higher start-up expenses from a new hospital project, the imposition of VAT and provisions for credit losses as it adopted International Financial Reporting Standards.

Arabian Cement tumbled 8.3 per cent in its heaviest trade since April 2016 after reporting a surprise first-quarter net loss of 6.1 million riyals.

Three analysts surveyed had on average forecast a profit of 69m riyals.

Dubai’s index fell 0.9 per cent to a two-year low, hurt by selling in property stocks.

Emaar Properties closed 1.6 per cent lower after opening higher. The stock is down 16 per cent so far this year.

DAMAC Properties ended the day 0.4 per cent lower but erased some of its losses in early trade, when it was down 2.9 per cent. The stock suffered on Monday after it lowered its annual dividend, which was not a shock for institutional investors who track the company’s cash flow, but caught retail investors by surprise, analysts said.

Qatar’s index fell 0.7 per cent on profit-taking after a spate of strong earnings helped recent gains. Qatar National Bank dropped 1.6 per cent and Qatar Electricity and Water fell 2.5 per cent.