Gulf markets reverse earlier gains on profit-taking, with trading volumes thin

Abu Dhabi Commercial Bank lost 0.9 percent after it merged last week with Union National Bank and Al Hilal Bank to create a banking heavyweight with 423 billion dirhams in assets. (Reuters)
Updated 05 May 2019
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Gulf markets reverse earlier gains on profit-taking, with trading volumes thin

  • The Saudi index was the worst hit in the Gulf, losing 1.7 percent, pulled down by heavyweight names in the banking and petrochemical sectors
  • The Abu Dhabi index lost 0.3 percent, pulled down by RAK Properties, which dropped 4.5 percent on lower first-quarter profits

DUBAI: Middle East stock markets reversed earlier gains and closed in negative territory on Sunday, hit by profit-taking and disappointing quarterly results from some companies, with trading thin ahead of Ramadan.

The Saudi index was the worst hit in the Gulf, losing 1.7 percent, pulled down by heavyweight names in the banking and petrochemical sectors. Al Rajhi Bank, Saudi Arabia’s second-largest lender by assets, lost 2.5 percent and Alinma Bank shed 1.7 percent.

“We continue to play the banking sector through Al Rajhi Bank, National Commercial Bank, Saudi British Bank, and Bank Aljazira, which have all delivered stellar results in Q1,” Dubai-based Arqaam Capital said in a research note.

“However, upsides to FVe (fair valuation estimates) have almost been closed, while earnings growth should slow in the coming quarters as Saibor (the Saudi interbank rate) has stabilized.”

Blue-chip Saudi Basic Industries Corp. lost 1 percent, while Saudi Kayan Petrochemical Co. shed 1.7 percent, despite an increase in oil prices at the end of last week. In Dubai, where the index shed 0.2 percent, Islamic Arab Insurance rose 14.9 percent and was the day’s most heavily traded stock on the exchange. Dubai Islamic Bank was the second most traded, adding 1.4 percent.

The Abu Dhabi index lost 0.3 percent, pulled down by RAK Properties, which dropped 4.5 percent on lower first-quarter profits. Abu Dhabi Commercial Bank lost 0.9 percent after it merged last week with Union National Bank and Al Hilal Bank to create a banking heavyweight with 423 billion dirhams ($115.2 billion) in assets, the third biggest in the United Arab Emirates.

In Egypt, where the index lost 2.4 percent, Orascom Investment Holding posted the highest volume and dropped 0.7 percent. Real estate company Emaar Misr for Development (EMFD) fell 3.2 percent after reporting a 17 percent drop in Q1 earnings.

“2019 started slow for EMFD after a robust performance last quarter for sales and handovers, which might not be exceeded or met this year,” Arqaam Capital said in a separate note.


Gulf countries strengthen oil coordination amid tensions: Kuwait

Updated 20 May 2019
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Gulf countries strengthen oil coordination amid tensions: Kuwait

  • ‘It is normal amid this escalation that Kuwait and the Gulf Cooperation Council countries take these steps’
  • Kuwait was in ‘constant contact’ with its ally, the US

KUWAIT CITY: Kuwait’s deputy foreign minister said countries in the Gulf have strengthened coordination to provide oil to global markets amid increased regional tensions.
“It is normal amid this escalation that Kuwait and the Gulf Cooperation Council (GCC) countries take these steps,” Khalid Al-Jarallah told reporters late Sunday on the sidelines of a Ramadan sit-down organized by the Iraqi embassy.
“There is cooperation and coordination between Kuwait and the Gulf countries to provide guarantees for oil tankers and continuous supply of energy to global markets.”
Jarallah’s comments come days after sabotage attacks against tankers in highly sensitive Gulf waters and the bombing of a Saudi pipeline — the latter claimed by Iran-aligned Yemeni rebels.
Both attacks targeted routes built as alternatives to the Strait of Hormuz, the conduit for almost all Gulf exports.
The US Fifth Fleet headquartered in Bahrain said the six-nation Gulf Cooperation Council began “enhanced security patrols” Saturday in international waters, in “tight coordination with the US navy.”
Iran has repeatedly threatened to close the strait in case of war with the United States, which earlier this month announced it was sending an aircraft carrier and strike group to the region.
Kuwait’s deputy foreign minister said “tension was escalating quickly” but he remained hopeful.
He added Kuwait was in “constant contact” with its ally, the US.
On Saturday, OPEC giant Saudi Arabia called for urgent meetings of the GCC and the Arab League to discuss recent “aggressions and their consequences” in the region.
The two summits are scheduled to be held in Makkah on May 30.
Jarallah welcomed the kingdom’s invitation, saying Kuwait was keen to take part in discussions on issues “potentially dangerous” to the region.