Regional stocks gain on global cues

Gulf stock markets were up yesterday, reflecting gains in world stocks last week after the threat of tariffs by the United States and China on billions of dollars of trade became a reality.

The Saudi index gained 0.6 per cent, with shares in retailer Fawaz Abdulaziz Alhokair rebounding 3.9 per cent from heavy losses last week, when it reported a drop in annual profit and announced it would close up to 75 stores.

Retail giant Almarai reported profit of 660.6 million Saudi riyals for the second quarter, 2 per cent down from 674.1m riyals in the previous period of last year, blaming a downturn in the market in part for its weaker than expected earnings. Shares in the company, which had fallen 4.5 per cent in the week before the results, rose 1.4 per cent yesterday.

The launch of VAT in Saudi Arabia and the UAE has impacted the retail market in those two countries.

“VAT has squeezed the purchasing power of consumers and as a result affected the retail market,” said Jassim al-Jabran, senior analyst at Al-Jazira Capital. “For Almarai, the main impact has been on its dairy segment because of the competition it was facing forcing it to reduce prices.”

Insurance companies continued to be among the best performers in the Saudi exchange, still benefiting from expectations of a surge in business after women started driving in the kingdom last month. United Cooperative Assurance Company was the best performer, gaining 5.7 per cent.

In Dubai, where the index was up 0.2 per cent, Amanat Holdings was the company that posted the largest gains as it jumped 6.7 per cent. The investment firm said last week that it has agreed to acquire Middlesex University’s campus in Dubai, which is partly owned by embattled private equity company Abraaj.

Ajman Bank added 0.4 per cent after announcing a net profit of Dh45m in the second quarter of this year, up from Dh29.3m last year.

Dubai’s contractor Drake & Scull International, one of the worst-performing stocks on the Dubai index, lost 0.3 per cent. The company has been lagging because of concerns about its financial position, business outlook and the outcome of an investigation into “violations” by previous management.