Stock News: Most Gulf Markets Dip; Saudi Blue Chips Rebound

Most Middle East bourses slipped on Wednesday as oil market turbulence kept equity investors cautious, although blue chips lifted Saudi Arabia’s index and energy importer Egypt rebounded following a wave of profit-taking.

Brent crude hit a high of $71.46 a barrel before giving back most of its gains in choppy trade.

Saudi Arabia’s index rose 0.7 per cent. Petrochemicals giant Saudi Basic Industries (SABIC) and Al Rajhi Bank were the main supports, jumping 2.6 and 2.3 per cent respectively.

SABIC, which last traded at SAR91.50, hit a two-year low of SAR89.00 on Sunday and has since been recovering slowly.

EFG Hermes last month cut its fair value estimate on SABIC to SAR125.00 from SAR145.00 but maintained a “buy” recommendation on the stock, saying a scenario of $70-per-barrel oil seemed to be already priced in.

Telecoms were the main drag on the index as Etihad Etisalat (Mobily) dropped 6.9 per cent to a 34-month low of SAR47.80 and Zain Saudi tumbled 8.5 per cent to a record low of SAR6.75.

Both stocks were suspended for Tuesday trading after Mobily, the Kingdom’s second-biggest mobile operator, said it was seeking arbitration to obtain SAR2.2 billion ($586.28 million) owed by Zain Saudi, a claim its smaller competitor subsequently said was unfounded.

QATAR, EGYPT

Other Gulf markets declined. Qatar’s index was the weakest, falling 1.1 per cent, while Kuwait slipped 0.1 per cent and Oman lost 0.2 per cent. Bourses in the United Arab Emirates were closed for a national holiday.

“It’s worth bearing in mind that, although Qatar has been pretty soft in the last week, it is still one of the best performing markets in the Gulf year-to-date,” said Akber Khan, director of asset management at Al Rayan Investment in Doha.

“Given this, much of the current weakness is about investors locking in profits in stocks they are still able to, as opposed to crystalising losses.”

Qatar’s benchmark is up 21.5 per cent this year, second only to Dubai which has gained 24.2 per cent.

Oil price moves will dominate investors’ attention and it might take a while before the market finds a new equilibrium.

“Many investors are waiting to see where oil prices stabilise and for governments to announce budgets for the next fiscal year before they reassess valuations,” Khan said.

Meanwhile, Egypt’s bourse emerged from a mild profit-taking bout to rise 1.3 per cent as most stocks posted gains. As an oil importer, Egypt is certain to see improvements in both fiscal and trade balances from cheaper oil.

Also boosting sentiment were official figures showing the number of tourists visiting Egypt in the third quarter jumped 70 per cent year-on-year, a relief for an industry hammered by three years of political turmoil.