Most Gulf markets fall amid volatile oil; Saudi shares rise

12/03/2015 06:41 AST

Most Gulf stock markets fell yesterday as oil remained volatile, but Saudi Arabia resumed its rally. Egypt’s Orascom Construction tumbled in Dubai as Egyptian investors appeared to sell the stock to acquire hard currency.

The main Saudi benchmark edged up 0.5% on late buying as the price of Brent crude oil rebounded towards $57 per barrel, after hitting a one-month low below $56.

The index closed exactly on its 200-day average of 9,662 points, a strong technical resistance level. Oil’s rebound allowed the petrochemicals sector to recover from early losses and close flat, while other stocks climbed.

Makkah developer Jabal Omar was the main support, surging 8.5% to an all-time closing high of 83.50 riyals. The company, which has become an investor favourite after swinging to profit in the last two quarters, will hold its annual meeting on Thursday.

Al Rajhi Company for Co-operative Insurance surged its daily 10% limit to 29.80 riyals after announcing a rights issue that would double its capital. The firm said it would offer shares to existing shareholders at their nominal price of 10riyals. A number of other insurance stocks also rose.

Dubai’s index fell 1.5% with most stocks in the red and Abu Dhabi slipped 0.3%. Trading volumes in both emirates were well below their 90-day averages.

Oman’s bourse fell 0.9% as local banks extended losses after three lenders earlier this week cut their cash dividends on the central bank’s advice - a sign that the central bank may be concerned about the possibility of banking system liquidity tightening because of low oil prices. National Bank of Oman and Bank Muscat, down 2.9% and 2.1%, were the main drags. Both have yet to pay 2014 dividends but have not announced any changes to their proposed amounts so far.

Egypt’s market fell 1.4% as all but a few stocks declined. Local newspaper Ahram Online reported fresh fuel shortages in the country; it said the petroleum ministry had promised to inject large amounts of petroleum products into the market to address the issue.

Also, Orascom Telecom posted a 76.4% drop in 2014 net profit yesterday, a day after Telecom Egypt also posted a decline in earnings. Orascom Telecom dropped 4.0%.

However, Commercial International Bank edged up 0.7% after saying it was carrying out a due diligence process on Citigroup’s books that could lead to the purchase of Citi’s Egyptian retail portfolio.

Orascom Construction briefly jumped to 110.45 pounds as it started trading in Cairo but then fell to 106.35 pounds, below its public offer price of 108.71 pounds ($14.25).

On NASDAQ Dubai, where it is quoted in dollars and began trading on Monday, the stock was much weaker yesterday, tumbling 7.7% to $13.02.

Egypt restricts foreign currency trading and has a parallel black market where the pound trades below the official rate. Some traders speculated that Egyptian investors who bought the stock for Egyptian pounds in its Cairo public offer, which raised the equivalent of $185mn, might now be selling it in Dubai to obtain hard currency.

“That’s a good possibility,” said Sanyalak Manibhandu, manager of research at NBAD Securities in Abu Dhabi. “People who bought into the stock must be reasonably sophisticated and understand arbitrage.”

Elsewhere in the Gulf, Kuwait’s index slipped 0.2% to 6,520 points; Oman’s index fell 0.9% to 6,404 points, while Bahrain’s index rose 0.2% to 1,475 points.

Reuters