Geopolitical tensions weigh on Gulf stocks

Higher oil prices helped Saudi Arabia’s stock market to offset some of this week’s losses yesterday, though other Gulf markets were down as geopolitical concerns continued to weigh on investors in the region.

Trading activity was also slow because of the Muslim fasting month of Ramadan, traders said.

The Saudi index gained 0.7 per cent as Brent crude futures hit $80 a barrel for the first time since November 2014 on concerns Iranian exports could fall, reducing supply in an already tightening market.

The prospects of a sharp drop in Iranian oil exports in the coming months due to renewed US sanctions have been good to oil prices, but they also raise concerns of instability in an already conflict-torn region.

Shares in the energy and petrochemical sectors rose in Saudi Arabia, led by companies with big capitalisations including Saudi Basic Industries which gained 1.3 per cent and Saudi Kayan Petrochemical Company which rose 1.2 per cent. National Petrochemical Co was up 1.5 per cent.

Shares of Saudi Arabia’s Alawwal Bank stayed on a positive trend with another 0.6 per cent gain to 14 Saudi riyals in heavy volume, after a 10 per cent jump on Wednesday.

Alawwal has reached a preliminary, non-binding agreement to merge with HSBC-backed Saudi British Bank to create Saudi Arabia’s third-biggest bank with assets of about $77 billion.

Other Saudi bank shares were mixed with the kingdom’s biggest lender, National Commercial Bank, gaining 4.2 per cent and Saudi British Bank falling by 3.3 per cent to 30.88 riyals, extending losses for a second day. Alinma Bank was also up 1.1 per cent.

In Abu Dhabi, real estate developers Eshraq Properties and Aldar Properties were the most heavily traded shares, with Aldar giving up 0.9 per cent.

In Dubai, the index was down 0.6 per cent, dragged lower by Emaar Properties and subsidiary Emaar Development, down 1.2 per cent and 0.7 per cent respectively. GFH Financial helped reduce the market losses and rose 2.1 per cent.

In Qatar, the main index, which rose earlier this week after it was buoyed by MSCI’s decision to increase the weightings of several blue chips, was also in negative territory, losing 0.7 per cent.