Saudi, Dubai slip in blue chip sell-off

Sentiment hit by weak oil prices, global equities

DUBAI, Dec 20, (RTRS): Stock markets in Saudi Arabia and Dubai fell back on Sunday after oil prices slumped further, while Abu Dhabi and Egypt were buoyed by banking shares.

Brent crude settled at $36.88 a barrel on Friday after hitting a session low of $36.41, just 21 cents above a 2004 bottom. Meanwhile, global bourses sank on economic growth worries, with the Dow closing over 2 percent lower.

In response, the Saudi benchmark retreated 1.6 percent to 6,931 points, erasing most of Thursday’s 2.6 percent jump. Sellers dumped blue chips in the first hour and mostly sat out the rest of the session, waiting for the announcement of the kingdom’s 2016 state budget, which is expected in the coming week and may include major spending cuts.

Saudi Basic Industries, the bourse’s largest company by market value, declined 2.5 percent. Bank sector heavyweight Al Rajhi slumped 3.7 percent.

Banking stocks had surged on Thursday on hopes that higher interest rates would improve lending margins, but “the so-called market euphoria following the US interest rate hike on Wednesday was shortlived,” said a Jeddah-based trader.

“Some traders turned a quick profit and sold positions, and they are not willing to re-enter the market until the budget is announced.”

Dubai’s index, which had jumped 2.9 percent on Thursday, fell back 1.5 percent in thin trade on Sunday.

“The market lacked momentum to carry on trading higher as traders turned a quick profit and sold off, taking their cue from global markets that closed lower on Friday,” said a regional fund manager.

Real estate related stocks, which make up most of Dubai’s market value, declined. Arabtec and DAMAC Properties led the retreat, tumbling 3.7 and 3.0 percent respectively.

Abu Dhabi’s index recouped early losses and closed 0.2 percent higher in the heaviest trade since the beginning of the month, gaining for the third straight session. First Gulf Bank rose 1.6 percent, and is up 11.7 percent over the past week.

Dana Gas, the most heavily traded stock on the bourse, jumped 11.1 percent in its heaviest trading since July.

The surge was partly due to a “catch-up effect” after Dana’s shares were suspended on Thursday, and partly because of a statement issued by Dana on Sunday reiterating that it had settled a business dispute with Germany’s RWE and clarifying details of the settlement, said Sanyalaksna Manibhandu, senior analyst at Abu Dhabi’s NBAD Securities.

Qatar’s exchange was closed for a national holiday.

Cairo’s benchmark climbed 0.6 percent in its fourth straight day of gains, as Commercial International Bank added 1.9 percent. On Thursday, it had jumped 5.6 percent after agreeing to sell investment banking subsidiary CI Capital to Orascom Telecom for 1 billion Egyptian pounds ($128 million).

Orascom fell 1.7 percent, erasing some of Thursday’s gains, when it surged 11.1 percent. Orascom Telecom plans to merge CI Capital with Beltone Financial, which it bought last month for almost 650 million pounds; Beltone rose 10 percent on Sunday.

Foreign investors remain nervous about hard currency shortages in the country and they — along with Arab traders — were net sellers on Sunday, bourse data showed, while Egyptians were net buyers.

Unlike most its Gulf counterparts, which hiked interest rates last week, Egypt’s central bank made no decision on interest rates at its Thursday monetary policy committee meeting and said it would reconvene on Dec. 24 following consultations with the government on inflation and growth.

The meeting was the first under the central bank’s new governor, Tarek Amer, who has led a drive to indirectly support the Egyptian pound and supply banks with foreign currency liquidity despite dwindling foreign reserves.

Saudi Arabia

The index fell 1.6 percent to 6,931 points.

Dubai

The index declined 1.5 percent to 3,026 points.

Abu Dhabi

The index climbed 0.2 percent to 4,156 points.

Egypt

The index rose 0.6 percent to 6,708 points.

Kuwait

The index fell 0.9 percent to 5,572 points.

Bahrain

The index slipped 0.2 percent to 1,195 points.

Oman

The index slid 0.1 percent to 5,355 points.