Saudi stock index falls further

26/10/2015 05:49 AST

Saudi Arabia’s stock market fell further on Sunday because of worries that low oil prices would force Riyadh into spending cuts and tax increases, although most other Gulf markets rose in response to a strong tone for global equities.

The Saudi stock index edged up in early trade but soon resumed falling and closed down 1.4 percent to 7,276 points. , bringing its losses over four trading days to 6.7 percent.

Leading petrochemical producer Saudi Basic Industries, its margins squeezed by low oil prices and facing the possibility that the government could raise gas prices to save money, fell 2.7 percent.

Al-Rajhi Bank dropped 2.8 percent and telecommunications firm Zain Saudi lost 3.6 percent.

However rival telecommunications operator Etihad Etisalat, which plunged 10.1 percent on Thursday after reporting a surprise third-quarter loss, rose 0.4 percent.

The mood was more optimistic elsewhere in the Gulf, where Dubai’s index edged up 0.3 percent. Gulf Navigation, the most heavily traded stock, soared 12.7 percent to its highest level this year. Integrated Capital, controlled by Abu Dhabi Financial Group, raised its stake in Gulf Navigation to 5.19 percent in mid-August and has since increased it further to 6.01 percent, exchange data showed.

Qatar’s index climbed 0.5 percent as Qatar Navigation gained 2.8 percent. The company reported a 1.8 percent rise in third-quarter net profit to 308 million riyals ($84.6 million), in line with analysts’ estimates. Kuwait Finance House, that country’s biggest Islamic lender, rose 1.8 percent after reporting a 21.6 percent rise in third-quarter net profit to 43.4 million dinars ($143.8 million. That helped the Kuwaiti stock index gain 0.5 percent.

But Abu Dhabi fell 0.3 percent, dampened by weak earnings from Union National Bank. The bank’s shares slid 3.8 percent after it posted a 12.4 percent fall in third-quarter net profit to 480.59 million dirhams ($130.9 million).

A major reason for the profit drop was loan impairments, which jumped to 199.8 million dirhams from 126.9 million dirhams – possibly a negative signal for other United Arab Emirates banks if cheap oil starts to slow the economy in some areas.

Egypt’s index rose 0.6 percent, after slipping on Thursday as liquidity shifted from other stocks to property developer Amer Group, which resumed trading after a three-day suspension, and Porto Group, the new spinoff from Amer. Amer bounced 5.6 percent on Sunday and was the most heavily traded stock. Porto surged 7.7 percent and was the third most active stock.

Saudi Gazette