Saudi shares drop on Sunday as activity falls to 12-month low

Equity investors dumped Saudi Arabian stocks on Sunday, deterred by a recent downturn in global equity and oil markets while Qatar’s index held on to small gains as traders bought shares on price dips.

Riyadh’s index pulled back 1.9 per cent on the first day back following a 10-day Eid al-Adha break. But trading volume was the lowest since last September.

Oil-related companies were hit with Saudi Kayan Petrochemical declining 2.3 per cent in heavy trade, after Brent futures fell by around 5 per cent during the 10 days the Riyadh bourse was closed.

Banking shares were also weak with heavyweight National Commercial Bank dropping 4.2 per cent.

Key interest rates in Saudi Arabia are linked to US interest rates, given the currency’s peg to the dollar, and the uncertainty over Wednesday’s US Federal Reserve meeting following a week of mixed US economic data weighed on sentiment. However, the market viewed the likelihood of a US rate rise as low.

Qatar’s share index climbed 0.4 per cent in active trade, with volume the highest in a month as investors bought back some shares which were hit by profit taking before the holiday.

Islamic lender Masraf Al Rayan was the most traded share and added 0.7 per cent while telecommunication operator Ooredoo jumped 3.9 per cent.

Shares in companies set to be included in index compiler FTSE’s secondary emerging market index on Sept. 20 outperformed last month.

Dubai’s index steadied and added 0.03 per cent after it fell 1.1 per cent on Thursday, when it reopened after a week-long holiday.

Shuaa Capital surged 9.3 per cent. Shares in the investment firm have surged 36.5 per cent over the past three weeks since the firm started to offer liquidity services for Nasdaq Dubai’s single stock futures trades. Shuaa is the only firm offering market-making facilities to brokers.

GFH Financial Group added 2 per cent, extending its 1 per cent gain from Thursday after the company said its Dubai-based subsidiary GFH Capital sold its remaining 18 per cent stake in English football club Leeds United.

In neighbouring Abu Dhabi, blue chips dragged the index 0.3 per cent lower. First Gulf Bank lost 0.8 per cent and telecommunication giant Etisalat edged down 0.3 per cent.

Egypt’s index of the 30 most valuable stocks fell 0.8 per cent in thin trade as roughly two-thirds of the shares declined.

Real-estate developers were some of the top losers with Talaat Mostafa Group shedding 4.4 per cent and Porto Group declining 3.7 per cent.

MORE POSITIVE OUTLOOK

Over the next three-to-six months Credit Suisse expects a better performance from Gulf equities, supported by a more positive outlook on oil prices and stabilising earnings forecasts.

“Valuations are reasonably attractive, being in line with the long-term average… Technicals suggest the worst is behind us, though we believe it is too early to turn outright bullish.”

Analysts see further downside risks to Saudi Arabia, Qatar and Bahrain and they favour shares in the UAE, especially companies in Dubai.

SUNDAY’S HIGHLIGHTS

SAUDI ARABIA

* The index fell 1.9 per cent to 6,060 points.

QATAR

* The index added 0.4 per cent to 10,572 points.

DUBAI

* The index rose 0.03 per cent to 3,483 points.

ABU DHABI

* The index dropped 0.3 per cent to 4,486 points.

EGYPT

* The index fell 0.8 per cent to 7,916 points.

BAHRAIN

* The index rose 0.3 per cent to 1,128 points.