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 percent. Petrochemicals giant Saudi Basic Industries (SABIC) and Al Rajhi Bank were the main supports, jumping 2.6 and 2.3 percent respectively.

SABIC, which last traded at 91.50 riyals, hit a two-year low of 89.00 riyals on Sunday and has since been recovering slowly.

EFG Hermes last month cut its fair value estimate on SABIC to 125.00 riyals from 145.00 riyals 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 percent to a 34-month low of 47.80 riyals and Zain Saudi tumbled 8.5 percent to a record low of 6.75 riyals.

Both stocks were suspended for Tuesday trading after Mobily, the kingdom’s second-biggest mobile operator, said it was seeking arbitration to obtain 2.2 billion riyals ($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 percent, while Kuwait slipped 0.1 percent and Oman lost 0.2 percent. 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 percent this year, second only to Dubai which has gained 24.2 percent.

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 percent 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 percent year-on-year, a relief for an industry hammered by three years of political turmoil.

WEDNESDAY’S HIGHLIGHTS

SAUDI ARABIA

* The index climbed 0.7 percent to 8,802 points.

EGYPT

* The index rose 1.3 percent to 9,305 points.

OMAN

* The index slipped 0.2 percent to 6,584 points.

QATAR

* The index fell 1.1 percent to 12,612 points.

KUWAIT

* The index slipped 0.1 percent to 6,775 points.

BAHRAIN

* The index eased 0.1 percent to 1,413 points.

Source: Reuters