Oil, global markets weigh on region but Saudi petchems rise
DUBAI, January 22, 2016
Most Middle Eastern bourses fell on Thursday as investors remained worried by the chronic weakness of oil prices and declines in international bourses, but Saudi Arabia's stock index edged up on the back of petrochemical shares.
A petchems rally in the final hour of trade helped pull the Saudi index up 114 points from its intra-day low of 5,349 points, its lowest level since March 2011. It closed 0.1 per cent higher at 5,464 points.
Saudi Basic Industries, the largest petrochemcical firm, bounced up 1.7 per cent to SR61.75 ($16.4), well off its session low of SR59.50. The stock is down 19.5 per cent year-to-date.
"The swing factor in the markets is oil, because although technical analysis shows that the majority of stocks are in oversold territory, as long as Brent remains below $30 investors will have no confidence in any type of analysis," said a Jeddah-based portfolio manager.
Brent has lost 26 per cent in January, on track for its biggest monthly fall since 2008. Economists think Saudi Arabia's state budget, announced last month, was based on an average Brent price of about $40 per barrel. If Brent stays below $30, the government could be pressed into more spending cuts.
Saudi companies are coming under pressure as they announce fourth-quarter earnings. Savola Group plunged 6.6 per cent despite reporting an 18.6 per cent rise in net profit, which was SR515.3 million ($137.3 million); analysts had on average forecast SR478.5 million.
Saudi Telecom Co fell in early trade but ended up 0.9 per cent. It reported a 20.2 per cent fall in fourth-quarter profit. Net earnings were SR1.95 billion; analysts had forecast SR2.36 billion.
Saudi Arabian Mining Co (Ma'aden) climbed 2.5 per cent despite reporting results below expectations; it made a net loss of SR5.7 million. Ma'aden said no dividend would be paid for 2015.
Fawaz Alhokair Co plunged 8.4 per cent after the retailer reported a 14.2 per cent fall in third-quarter net profit. Earnings were SR91.2 million.
"We believe the disappointing results were mainly due to the adverse impact of foreign exchange volatility, which hurt international revenue and margins," NCB Capital said in a note on Alhokair. NCB Capital had expected the company to make a quarterly profit of SR130 million.
But Emaar Economic City, a heavily traded mid-cap industrial land developer, rose 5.3 per cent after the company reported a 129 per cent increase in fourth-quarter earnings.
Dubai's index traded down 0.6 per cent to 2,622 points, a new 28-month low. Air Arabia fell 3.4 per cent to its lowest close since July 2013; contractor Drake and Scull tumbled 2.6 per cent to a record low.
But builder Arabtec advanced 1.9 per cent, trimming its 2016 losses to 6.3 per cent.
Abu Dhabi's bourse gave up early, minor gains and slid 0.8 per cent to a fresh 28-month low. Blue-chip lenders First Gulf Bank and National Bank of Abu Dhabi were down 2.9 and 1.4 per cent respectively.
But mid-tier energy-related companies Dana Gas and Abu Dhabi National Energy ended on a high note, advancing 5.3 and 7.7 per cent.
In Doha, the index fell 1.2 per cent with the sell-off concentrated in real estate developers. The biggest loser in the sector was large-cap Barwa Real Estate, down 5.3 per cent.
EGYPT
In Cairo, the main index fell 1.1 per cent to 5,713 points, the lowest close since September 2013, as foreign funds continued to exit.
"In Cairo the stock market is being dealt a double blow," said a Cairo-based trader. "On one hand, foreign managers are rotating out of stocks and into safe-haven assets or cash, and then there are the Arab investors who are not willing to commit to the region because of oil."
Talaat Mostafa Group, a real estate investment firm favoured by foreign funds, declined 4.1 per cent. - TradeArabia News Service
