Saudi stocks rise 0.2% from Wednesday’s 3-week low

07/11/2014 09:53 AST

Gulf stock markets stabilized after steep falls earlier in the week, as steadier oil prices and overnight gains by US equities persuaded some bargain-hunters to return.

Dubai rose 0.1 percent to trim its weekly losses to 3.1 percent, Qatar added 0.5 percent, and Saudi Arabia climbed 0.2 percent from Wednesday’s three-week low despite another plunge by telecommunications firm Mobily.

Mobily fell the maximum daily 10 percent to SR58.50, reaching a 27-month low.

The company’s shares have lost 27 percent in three days since it slashed its profits for 2013 and the first half of 2014 by a combined SR1.43 billion ($381.2 million), citing accounting errors, and also reported a 71 percent drop in third-quarter profit. Mobily’s actions prompted the bourse regulator to launch a probe.

Before trading started, Abu Dhabi-listed Etisalat, which owns 27.5 percent of Mobily, said it was confident its affiliate would return to growth soon, but investors did not appear reassured. “We do believe there are major risks — at least over the short run,” MubasherTrade wrote in a note.

“Mobily’s future dividends may be reduced, especially (as) the company has a large capital expenditure plan. The lack of clarity surrounding the incident — with the detailed financials not yet published — will likely deter potential investmaent from investors.”

Mobily’s main rival Saudi Telecom Co. rose 0.2 percent and other heavyweight stocks also rebounded, with Saudi Basic Industries Corp. (SABIC) and Saudi British Bank (SABB) up 2.3 and 2.6 percent respectively.

“We were held hostage by volatility in commodity and global equity markets this week,” said Marwan Shurrab, fund manager and head of trading at Vision Investments.

“After US crude broke below $80, most retail investors felt fear of the unknown in terms of what will happen to oil prices and the impact on government spending plans, so wanted to reduce their market exposure.”

Oil was steady on Thursday, with Brent and US Light Crude trading within a 1.1 percent range as the selling pressure of recent days eased.

Reuters