Weakness in banks push Saudi, Abu Dhabi stocks lower

Weakness in banking shares pushed indexes in Saudi Arabia and Abu Dhabi stocks lower in early trade on Sunday, while Qatari stocks rebounded on demand for Industries Qatar, which bounced back after sharp losses this month on weak earnings.

Saudi stocks were down 0.1 percent, with Saudi British Bank down about 1 percent and Samba Financial Group falling 1.2 percent.

Banking stocks have been under pressure in recent weeks from the Saudi central bank’s decision to follow the U.S. Federal Reserve in cutting interest rates, which analysts expect will squeeze profit margins at Saudi lenders.

Current account deposits, which yield little interest for depositors, represent around 60 percent of total deposits at Saudi banks, and had helped boost bank margins over the past few years as loans were priced at a higher rate.

In Abu Dhabi, the index slipped 0.4 percent, with First Abu Dhabi Bank (FAB) sliding 1.3 percent, which had also been a big beneficiary of higher interest rates. FAB is still up 6.4 percent in 2019.

Qatar stocks were up 1 percent in early trade, lifted by market heavy- weight Industries Qatar, which snapped six days of losses. The stock had been pressured by weak first half earnings.

Industries Qatar was up 4.3 percent in early trade, on bargain hunting after recent declines. The stock is still down about 8 percent since early August.

Dubai stocks were up 0.3 percent , helped by a nearly 1 percent gain in Emaar Properties.

Source: Reuters