Saudi index hits lowest in 11 months

Saudi Arabia’s stock index fell sharply yesterday with all its banking shares declining ahead of third-quarter results as expectations remain muted, while most major Gulf markets traded in negative territory.

The Saudi Tadawul, the benchmark index declined 1.6 per cent to 7,481.53, reaching its lowest level since November 2018. Riyad Bank fell 4 per cent and National Commercial Bank dropped 1.6 per cent.

Third-quarter results at Saudi banks are expected to be hit by two consecutive rate cuts by the Saudi central bank in August and September, which analysts say will squeeze their revenue.

“In general, expectations from third quarter results are muted. Rate cuts are spread negative since a large chunk of their deposits are cost-free anyway and loan growth is not exciting,” said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital.

National Gas And Industrialisation, better known as Gasco, fell 4.6 per cent as it traded ex-dividend. With the fall, the kingdom’s main index has fallen in 10 of 11 sessions this month, leaving it 4.2 per cent down in the year to date. The index was up more than 20 per cent in the first four months of 2019 in the run-up to joining the MSCI and FTSE emerging-market indexes, which helped attract billions of dollars from passive funds.

Dubai’s main share index slid 0.5 per cent to 2,823.86, extending losses from the previous sessions in a downturn led by real estate stocks. Blue chip developer Emaar Properties dropped 1.1 per cent and Union Properties plunged 7.2 per cent. The developer said there had been “no major undisclosed news” within the past few days to cause a price shift.

In Abu Dhabi, the index was down 0.1 per cent 5,081.53, led by a 0.8 per cent fall in Abu Dhabi Commercial Bank and a 0.1 per cent drop in First Abu Dhabi Bank.

In Kuwait, the premier market index closed up 0.3 per cent at 6,246.13, while in Bahrain the index fell 0.1 per cent to 1,519.37. In Oman, despite a slew of positive results from the country’s banks, the index rose by just 0.1 per cent to 4,016.67

Egypt’s blue-chip index was down 0.9 per cent to 14060.82, with 23 of 30 stocks on the index seeing a decline. Egypt Kuwait Holding dropped 2.4 per cent and Eastern Company was down 1.2 per cent.