Gulf stock markets down on Brexit vote

27/06/2016 01:56 AST

Middle East stocks fell sharply on Sunday because of Britain’s vote to leave the European Union but Gulf bourses came well off their lows.

In Saudi Arabia the index closed 1.1 per cent lower at 6,479 points but bounced from an intra-day low of 6,257 points.

Petrochemical blue chip Saudi Basic Industries fell 1.5 per cent and National Commercial Bank was down 1.3 per cent.

But Arabian Pipes, which soared last week after winning a contract from oil giant Saudi Aramco, jumped its 10 per cent daily limit for a fourth straight day. Utility Saudi Electric, seen as a defensive stock, rose 1.6 per cent.

Egypt was hardest hit because of concern that fund inflows into the country could shrink further. Egypt’s stock market dropped much more sharply than Gulf bourses and closed near its intra-day low.

Naeem brokerage said in a note that the economic impact on Egypt of Brexit would not be very serious, because weakness in the British pound and euro could actually benefit the current account balance of the import-driven Egyptian economy, and 16 per cent of the country’s external debt was denominated in euros.

But initially at least, investors focused on the risk that the global market turmoil would make it even harder for Egypt to attract fund inflows.

That would worsen the hard currency shortage which is plaguing local industry, possibly making more depreciation of the Egyptian pound inevitable.

Real estate developer Talaat Mostafa lost 7.4 per cent. Juhayna Food Industries, which exports its products to Europe and could see that business hurt by currency weakness there, slid 4.3 per cent.

Commercial International Bank, Egypt’s biggest bank and a favourite of foreign investors, outperformed, falling 2.2 per cent.

Beltone Financial dropped 1.3 per cent after it filed a lawsuit against the heads of the Cairo stock exchange and Financial Supervisory Authority over their repeated cancellation of trades in its stock.

Dubai’s index dropped 3.3 per cent to 3,258 points as trading volume more than doubled from Thursday. But the index came off its intra-day low of 3,209 points and held technical support on the May low of 3,197 points.

The Gulf Today