Tadawul index continues to decline

14/01/2016 05:25 AST

Egypt's index made its largest decline in two months to slump to a 25-month low on Wednesday as foreign funds sold stocks, while most Middle East bourses also fell after giving back early-session gains.

Cairo's benchmark dropped 4.0 percent to 6,205 points with all 29 traded stocks down more than 1 percent.

The index is down 11.4 percent this year and its close was its lowest since late 2013. The bourse had risen initially, but then plunged suddenly. "The mid-session sell-off was largely unexpected and caught us off guard," said a Cairo-based stock trader. "The sharp price correction could have been caused by foreign funds which are exiting their positions."

Foreigners were net sellers for a fourth day, bourse data showed. Saudi Arabia's Tadawul All-Share Index fell 0.5 percent to 6,038 points — its lowest finish since October 2011. Half-way through the session, the mood also turned negative as small and mid-cap stocks were aggressively sold.

Petrochemical stocks were mixed, with sector heavyweight Saudi Basic Industries (SABIC) up 1.5 percent. Saudi Kayan jumped 4.1 percent as investors welcomed a lower-than-expected impact on its production costs from changes to energy and feedstock prices.

Small and mid-cap stocks nose dived to ultimately drag down the bourse. Some insurance companies — which are considered speculative stocks — such as Al-Sagr Cooperative and Solidarity Saudi Takaful each tumbled more than 10 percent.

"Traders were cashing out of illiquid stocks because they aren't offering investors attractive valuations, even after the recent sharp price corrections," said a Riyadh-based portfolio manager.

UAE, QATAR Bourses in the United Arab Emirates and Qatar also failed to hold onto early gains, indicating little investor confidence in a sustained rebound. Doha's exchange fell 0.8 percent to 9,405 points — a 28-month low. Lenders Qatar Islamic Bank and Masraf Al-Rayan each lost more than 3 percent.

"There is little fresh money entering the markets and what is creating the unsustainable bounces are the day traders chasing a quick profit," said an Abu Dhabi based analyst. Dubai's index managed to close near-flat after it briefly dipped into negative territory.

Arab News