Saudi stocks edge higher

An investor walks at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia, in this January 18, 2016 photo. (REUTERS)
Updated 06 February 2017
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Saudi stocks edge higher

DUBAI: The Tadawul All Share Index (TASI) added 0.2 percent on Monday with buying momentum building in the final hour. Petrochemical shares were the main support with almost two-thirds of the 14 producers gaining.
Loss-making Nama Chemicals surged 9.5 percent after slumping 6.7 percent on Sunday. Shares in the polymer maker have been volatile since it announced a recovery plan late last month.
Insurance stocks, often traded by retail investors, were robust; Buruj Cooperative Insurance jumped 8.6 percent.
The sector was one of the best-performing with net income more than doubling in 2016, according to Al-Rajhi Capital. Analysts attributed the growth to greater efficiencies and higher pricing.
Meanwhile, most stock markets in the Gulf moved little but the United Arab Emirates (UAE) bourses outperformed with mid-to-large sized companies boosting Dubai, while Egypt’s index slipped in thin volume.
Dubai’s main index added 1.2 percent as Emaar Properties gained 2.7 percent after saying it would recover AED1.22 billion ($332 million) from an insurance claim for a fire that engulfed one of its hotels in late 2015.
The Dubai-listed shares of GFH Financial Group fell as much as 6.5 percent during the day but ended 0.4 percent higher. The Bahrain-based financial firm announced plans for a big increase in share capital to fund a new growth strategy of acquiring financial institutions and infrastructure investments.
Large caps helped carry Abu Dhabi’s index 0.7 percent higher. Dana Gas, which has not yet reported quarterly earnings, rose 1.9 percent.
Kuwait’s index rebounded 0.2 percent after sinking 2.3 percent in the previous session as investors worried over rising political tensions between the Cabinet and Parliament, which may delay the country’s economic plans.
The Kuwaiti index soared 19 percent last month but has lost steam in the past week and fund managers are split over whether the bull run has ended.
“We are skeptical that Kuwait offers a durable, positive investment case for frontier investors,” investment bank Exotix said in a report.
But it added that the stocks were back to their mean valuations for the past five years from the point of view of price/book ratios, and said stocks such as National Bank of Kuwait and Agility combined relatively low valuations with dividend yields above 3 percent.
Egypt’s index fell 0.3 percent with two-thirds of the blue-chip constituents declining.
GB Auto lost 3.5 percent after the automotive industry council published a report showing car sales in Egypt fell to their lowest in five years and car brands sold by GB Auto declined 55 percent month-on-month in November 2016, the month when the Egyptian pound was floated and lost nearly half its value.
al car unit sales,” they wrote.


Another surprise fall in UK inflation muddies Bank of England rates message

Updated 4 min 53 sec ago
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Another surprise fall in UK inflation muddies Bank of England rates message

LONDON: British inflation fell unexpectedly in April, according to figures on Wednesday that added to doubts about when the Bank of England will raise interest rates again and pushed sterling to its lowest level against the dollar this year.
Consumer price inflation cooled to 2.4 percent last month, its weakest increase since March 2017, and down from 2.5 percent this March.
The figure was below economists’ average expectation in a Reuters poll for it to hold steady at 2.5 percent and represented the second surprise fall in a row after a drop in March’s figures. “It’s a conundrum for the Bank of England which has struggled to read the direction of price changes recently,” Ed Monk, associate director for personal investing at fund manager Fidelity International, said.
“With inflation trending lower, it only makes it harder for the Bank of England to raise rates.” Investors were now pricing in a one-in-three chance of a BoE rate hike in August — the next time it updates its forecasts on the economy — down from 50/50 before Tuesday’s data.
High inflation, caused by the pound’s drop after the 2016 Brexit vote, squeezed British consumers through last year, and although it has receded from its December peak of 3.1 percent, the BoE is keeping a close eye on price pressures.
PIPELINE PRESSURE
Wednesday’s data pointed to some signs of inflation pressure still in the pipeline. Prices of goods leaving British factories increased at a faster rate than expected last month. And while consumer price inflation cooled again, the timing of the Easter holidays and their impact on air fare prices was a big contributor.
On Tuesday Bank of England Governor Mark Carney cited a new sugar tax on soft drinks, as well as higher utility bills and petrol prices, as reasons why inflation “probably tips up a bit” in the coming months before resuming a decline. The ONS said soft drink prices increased sharply over the last couple of months but the overall impact on inflation was minimal.
The latest data on prices in British factories, which eventually feed through onto the high street, were stronger than anticipated. Manufacturers increased the prices they charged by 2.7 percent year-on-year, matching March’s increase. Economists had expected a fall to 2.3 percent. Among manufacturers, the cost of raw materials — many of them imported such as oil — was 5.3 percent higher than in April 2017, up sharply from an increase of 4.4 percent in March and suggesting a long run of weakening price growth has ended.
A surprise drop in consumer price inflation in March, along weak economic growth figures for early 2018, had called into question whether the BoE would raise interest rates more than once before the end of the year.
Earlier this month it refrained from an interest rate hike that had at one point been widely expected. The BoE’s latest forecasts show inflation dropping to 2.1 percent in a year’s time, and returning to its 2.0 percent target a year later — but only if interest rates rise by 25 basis points about three times over three years.
The latest Reuters poll of economists suggests the BoE is most likely to raise interest rates at its August meeting.