Tadawaul hit by oil prices and budget

Saudi Arabia’s stock market fell sharply yesterday after oil prices sank, while Dubai rebounded on the back of a rise in bank shares.

Brent oil fell below $56 a barrel to its lowest level in more than a year, pushing the Saudi stock index down 1.1 per cent to 7,860 points in its biggest one-day drop since late November. Petrochemical shares fell, with Saudi Basic Industries dropping 2.4 per cent, and Al Rajhi Bank shedding 1.4 per cent.

The state budget promised a 7 per cent spending rise next year in an effort to spur sluggish economic growth, but that figure had already been flagged in a pre-budget announcement.

Saudi officials said they had no intention of changing plans to raise fees for expatriate workers this year, and indicated that domestic fuel price hikes might occur under a long-term subsidy reform policy.

In Dubai, the index rose 1.3 per cent to 2,544 points after falling 2.1 per cent in the last session.

While valuations are attractive, there was no rush for investors to build positions, said Vrajesh Bhandari, portfolio manager at Al Mal Capital in Dubai. However, some flows may be going into high-yielding stocks before annual dividends are announced early next year, he added.

Dubai’s largest lender Emirates NBD, which jumped 5.3 per cent, offers an 8.53 per cent dividend yield for next 12 months, according to Refinitiv data.

Dubai Investments, another high-yielding stock, climbed 1.6 per cent, while Damac Properties increased 4.2 per cent after hitting a multi-year low in the last session.

The Abu Dhabi index added 0.6 per cent to 4,860 points with First Abu Dhabi Bank, the UAE’s biggest lender, climbing 1.3 per cent. Abu Dhabi National Energy Company, which had slumped 9.1 per cent in the last session, rebounded 4.4 per cent in low volume.

In Oman, the index lost 1 per cent at 4,337 points, its biggest one-day drop since September.

Banks, which could face higher overseas funding costs as a result, were hit with Bank Muscat shedding 1.9 per cent and Bank Sohar slipping 2.6 per cent.

The Kuwait index edged up 0.2 per cent to 5,368 points.