Banks weigh on indexes in the Gulf

Abu Dhabi’s Securities Exchange dropped 0.3 per cent as trading yesterday closed at 5,039.13 as the index’s biggest stock, First Abu Dhabi Bank, declined 0.12 per cent during the day’s trading session.

The main gainer on the exchange was Al Qudra Holdings, which was up 12 per cent to Dh0.91 on the back of improved results. The company’s half-year profit to shareholders more than doubled yearon- year to Dh79.3 million, despite largely flat revenue of Dh179m. The main faller was National Bank of Fujairah, whose shares dropped about 10 per cent to Dh3.88. Traded values were 55 per cent below the 90-day average, though, according to EFG Hermes.

Saudi Arabia’s stock market, Tadawul, also dropped 0.3 per cent to 8,525.57, weighed down by the performance of some of its banks. Arab National Bank dropped 2.3 per cent, Riyad Bank fell 1.5 per cent, while both Saudi British Bank and Samba Financial Group both dropped by 1.3 per cent.

Saudi banks have performed well over the past 18 months in a rising interest rate environment, but with markets now pricing in an interest-rate cut by the US Federal Reserve next month, and the Saudi central bank likely to follow suit due to the riyal’s peg to the dollar, investors expect banks will also have to cut lending rates. This was the market’s first trading session in a week following the Eid Al Adha holidays, and traded values were 51 per cent below the 90-day average.

The Dubai market finished flat at 2,797.00, with Dubai National Insurance and Reinsurance the main gainer, climbing 6.1 per cent to Dh4.35 per share. Orascom Construction, which trades on Nasdaq Dubai, was one of the main losers in the emirate as its shares dropped 8.6 per cent to $5.26 per share.

Elsewhere in the region, Kuwait’s premier market dropped 1.7 per cent to 6,572.30. Banks were once again among the main losers, with Kuwait Finance House was the most actively-traded stock, dropping 2.2 per cent. Kuwait Investment Bank fell 3.6 per cent and Ahli United Bank dropped 2.5 per cent.

Bahrain’s bourse closed 0.3 per cent lower at 1,530.43, again led by a sell-off in banking shares, while the Muscat Securities Market closed largely flat at 3,862.47.