Saudi Petchem shares drop as Brent falls below $58

11/03/2015 05:27 AST

Stock markets in Saudi Arabia and Egypt stalled on Tuesday after rising for three days in a row, while most Gulf bourses remained sluggish and banks dragged down Oman as its central bank advised several lenders to reduce cash dividends.

The main Tadawul All-Share Index (TASI) slipped 0.1 percent to 9,613 points after meeting strong technical resistance near the 200-day average of 9,662 points.

Telecommunications firm Mobily dropped 4.0 percent after surging 21 percent in the previous three sessions on hopes that it would recover following a shock 2014 earnings revision.

The petrochemicals sector index fell 0.6 percent to 6,524.52 points as Brent crude dipped 1.7 percent to $57.51 per barrel and the oil market remained hobbled by oversupply and weak demand.

Saudi International Petrochemical Co. (Sipchem) fell 0.8 percent after specialist news agency Polymerupdate reported, citing a source, that the firm's methanol plant was operating at 80 percent of production capacity.

Saudi British Bank, which will register shareholders for a dividend payout on Thursday, edged up 0.5 percent. Alinma Bank, which has gone ex-dividend, fell 0.8 percent.

Dubai's index was flat as most stocks gained but heavyweight Dubai Islamic Bank tumbled 5.9 percent; its shares no longer carried the 0.40 dirham 2014 dividend.

Union Properties surged 5.9 percent after proposing a 3 percent, or 0.03 dirham per share, cash dividend and a 5 percent bonus share issue for 2014. It would be the company's first cash dividend since 2002, according to Thomson Reuters data. Union Properties last issued bonus shares for 2013, a 5 percent issue.

Islamic insurer Takaful Emarat surged 14.2 percent on its highest trading volume in more than a year after the firm said on Monday its board had decided to "discuss the decision on profit dividend during the annual general meeting" to be called soon, although it made no concrete proposal for a payout.

Takaful Emarat has never paid dividends since listing in 2008, according to Thomson Reuters data, and 2014 was its first profitable year.

Abu Dhabi fell 1.4 percent to 4,513 points because of large lenders Abu Dhabi Commercial Bank and First Gulf Bank which dropped 4.0 and 3.8 percent respectively.

Abu Dhabi National Energy Company dropped 2.7 percent. The firm is due to report fourth-quarter earnings this month and its profit is likely to take a hit from oil's plunge late last year. Qatar's benchmark edged up 0.2 percent and Ezdan Holding was the main support. The firm said on Tuesday its shareholders had approved a decision to treat investors from the Gulf Cooperation Council countries as locals, meaning that the 49 percent limit on foreign ownership in the company will no longer apply to them.

Property firm United Development dropped 4.1 percent as it went ex-dividend.

Oman's bourse fell 0.9 percent to 6,462 points as most banking stocks declined. National Bank of Oman and Bank Muscat fell 3.4 and 2.0 percent respectively, while Bank Sohar lost 2.4 percent.

Sohar and non-banking financial firm Taageer Finance Co. said this week that they had reduced proposed cash dividends for 2014 on the advice of the central bank. After Tuesday's close, Bank Dhofar also said it had cut its proposed cash dividend for 2014 to 5 percent from 10 percent based on the recommendation of the central bank.

The bank did not explain the reasoning behind the recommendation, but said it would increase its bonus share issue to 15 percent from 10 percent. Oman's central bank has not released a statement on its policy towards dividends but it may be concerned that low oil prices and the government's budget deficit could start to tighten banking system liquidity later this year, making it important for banks to keep cash reserves.

Reuters