Saudi petchem sector weighs on Tadawul

10/07/2017 05:48 AST

A sharp drop in crude oil weighed on Saudi Arabia's petrochemical sector on Sunday, as the Saudi stock benchmark Tadawul All Share Index lost 0.5 percent to 7,167 points.

Shares of Advanced Petrochemical, the first Saudi company to report second-quarter earnings, lost 0.7 percent after only a 1 percent year on year increase in second-quarter net profit.

Eight of the other 14 listed petrochemical makers declined, helping drag the index 0.5 percent lower.

Riyad Capital expects net earnings for the petrochemicals sector to shrink 13 percent year on year.

"We expect margins to be lower as product spreads continue to weaken while shutdowns could constrain already impacted sector," it said in a note.

Qatar's index edged down 0.2 percent to 8,904 points in the lowest daily traded volume since Saudi Arabia and three other Arab states cut diplomatic and trade links with Doha on June 5. Twenty shares rose while 15 shares.

In their statement late on Thursday, the four Arab states said the initial list of 13 demands they had put to Qatar was now void and they pledged further political, economic and legal steps against the emirate.

Gulf funds not including Qataris were net buyers by a tiny margin for the first time since the crisis erupted, bourse data showed. They made up a little over 5 percent of the total market turnover on Sunday. Locals made up a little under three-quarters and were net buyers.

The Abu Dhabi index added 0.3 percent, as shares of Dana Gas, which made up a little half of the total market turnover on Sunday, rebounded 1.5 percent.

On Thursday Dana fell 1.4 percent after sources told Reuters that London's High Court planned to hold a full hearing in September on efforts by the company to restructure $700 million of Islamic bonds.

In neighboring Dubai shares favored by short-term retail investors were the most active, with builder Arabtec jumping 7.4 percent to 3.47 dirhams. Dubai index edged up 0.04 percent to 3,403 points.

"The trend shall remain bullish towards the next barrier at 3.56 dirhams, where it may attract profit taking, but a break over shall ignite aggressive buying until the previous highs of 4.00 - 4.20 dirhams," said a note by NBAD Securities.

The stock has been strong since last week when Arabtec announced winning projects worth 755 million dirhams. Abu Dhabi index added 0.3 percent to 4,411 points.

Kuwait index added 0.7 percent to 6,724 points. Bahrain index fell 0.06 percent to 1,310 points. Oman index rose 0.3 percent to 5,135 points. Meanwhile, Egypt index fell 0.1 percent to 13,355 points.

Saudi Gazette