09/12/2014 04:34 AST
Most stock markets in the Gulf fell yesterday after oil prices sank to new lows and Dubai’s index dropped as investors dumped shares in Emaar Properties, which had gone ex-dividend.
Dubai’s bourse fell 3.3% to 4,031 points and Emaar tumbled 7.0% late in the session to 8.32 dirhams; both hit five-month lows.
While there was no fundamental reason for such a steep drop by Dubai’s biggest listed property firm, the most likely explanation was a sell-off by investors who had held it for a dividend payout, said Shakeel Sarwar, head of asset management at Securities & Investment Co in Bahrain.
The record date for Emaar’s special 1.257 dirham dividend was November 30 and the stock has since plunged 21.5%. It has major technical support at 7.95 dirhams, the June low.
Most other Dubai stocks also fell, with the exception of low-cost carrier Air Arabia, which jumped 2.0% to 1.56 dirhams. The stock has gained 18.2% since the end of October, becoming a safe haven in an otherwise bearish market; it faces strong chart resistance at 1.65-1.68 dirhams, this year’s peaks.
With fuel making up a significant part of Air Arabia’s costs, the company stands to benefit from cheaper oil.
Abu Dhabi’s bourse was mixed and its main index fell 0.9%. First Gulf Bank and Union National Bank fell 1.1% and 3.8% respectively, while National Bank of Abu Dhabi rose 1.6%.
Oman’s bourse stabilised and inched up 0.1% after tumbling 4.2% in the previous session. Banking stocks, which had dropped when rating agency Standard & Poor’s cut its outlook for Oman’s credit rating to negative, rebounded with HSBC Oman and Ahli Bank up 4.5 and 2.0% respectively.
However, Raysut Cement, which had fallen its daily 10% limit on Sunday, dropped a further 3.2%. The firm said on Sunday that the price it paid for gas supplies would double next year, as the government responded to the oil price drop by cutting subsidies.
Saudi Arabia’s index fell 1.7% as nearly all stocks in the key petrochemical and banking sectors declined.
Saudi Basic Industries dropped 3.0% and its subsidiary Yanbu National Petrochemical Co (Yansab), which last week proposed a dividend cut and announced plans to shut down a plant for maintenance, fell 1.3%.
Brent crude oil fell more than $2 a barrel yesterday to a new five-year low on predictions that oversupply would keep building until next year after Opec decided not to cut output. Cheaper oil may eat into the margins of Gulf petrochemical producers, which have previously enjoyed cost advantages thanks to subsidised feedstock.
Oil importer Egypt’s stock market rose for a fourth straight session, adding 0.5%. Carpet maker Oriental Weavers surged 6.1% to 60pounds, its highest level since early 2006.
The company said last week it would launch two new carpet manufacturing plants and one plant to produce threads. The Daily News Egypt newspaper also quoted its founder Mohamed Farid Khamis as saying sales would grow 5.5% this year.
Shares in property developer Heliopolis Housing jumped 4.8% after its annual meeting approved a dividend of 1.0 pound per share, up from last year’s 0.85 pound, according to Reuters data.
Elsewhere in the Gulf, Kuwait’s measure fell 1.3% to 6,665 points, while Bahrain’s index slipped 0.1% to 1,410 points.
Reuters
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