Banks boost Saudi stock market, Qatar hit by sell-off

The Saudi index increased 1.66 percent, with Al Rajhi Bank adding 2.2 percent and Saudi Basic Industries up 3.3 percent. (Reuters)
Updated 21 May 2019

Banks boost Saudi stock market, Qatar hit by sell-off

  • MSCI last week said it would include MSCI Saudi Arabia in its emerging-markets index
  • Qatar’s index was down 2 percent, with 17 of its 20 stocks sliding

BENGALURU: Saudi Arabia’s stock market rose sharply on Tuesday, leading gains in most major Gulf bourses amid a global rally after Washington temporarily eased trade restrictions imposed last week on China’s Huawei. Qatar dropped due to a wide sell-off.
The Saudi index increased 1.66 percent, with Al Rajhi Bank adding 2.2 percent and Saudi Basic Industries up 3.3 percent.
The “Middle East today is following the positive lead from global markets. Local sentiment is also better as evidenced by the strong moves in small cap stocks,” said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital.
“We expect Saudi Arabia to continue its upward trend until at least the MSCI effective date May 28,” added Vrajesh. “Thereafter, investors need to be selective and follow a bottom up-approach. Overall, we find better value in UAE and Egypt.”
MSCI last week said it would include MSCI Saudi Arabia in its emerging-markets index, effective May 28, a move that could draw billions of dollars into the market.
Saudi International Petrochemical closed 3.4 percent higher. The firm completed the merger of equals with Sahara Petrochemical, which delisted on May 20.
Qatar’s index was down 2 percent, with 17 of its 20 stocks sliding.

The Middle East’s largest lender, Qatar National Bank, dropped 2.4 percent, while Mesaieed Petrochemical Holding plunged 10 percent, snapping a six-day winning streak triggered by the stock inclusion in MSCI’s index.
Egypt’s blue-chip index gained 1.7 percent as most of its stocks rose, with Market heavyweight Commercial International Bank gaining 0.9 percent.
El Sewedy Electric jumped 5.9 percent after it partnered with General Authority For Suez Canal Economic Zone to establish a new company with issued capital of 1 billion Egyptian pounds ($58.82 million), in which the firm will own 49 percent.
Abu Dhabi’s index closed 1.1 percent higher, led by a 1.3 percent increase in the country’s largest lender, First Abu Dhabi Bank.
Dana Gas jumped 4.1 percent after the energy firm said it had started drilling operations at Merak-1 well, offshore Egypt.
National Marine Dredging soared 13.9 percent after last week reporting a higher first-quarter earnings.
The Dubai index rose 1 percent as all but one of its real estate stocks rose.
Emaar Properties, Dubai’s largest listed-developer, increased 2.9 percent while its units Emaar Malls and Emaar Development were up 2.3 percent and 3 percent respectively.
The UAE said on Tuesday that it will grant 6,800 foreign investors permanent residency under a new “Golden Card” system after they invested a combined 100 billion dirhams ($27.23 billion) in the Gulf state.
National Cement Company was up 1.7 percent after news it had bought ARM Cement’s Kenyan assets for $50 million.
Arabtec Holding rebounded 2.1 percent, snapping four straight sessions of losses on weak first-quarter earnings.

Economists fear a US recession in 2021

Updated 12 min 31 sec ago

Economists fear a US recession in 2021

  • Trump’s higher budget deficits ‘might dampen the economy’

WASHINGTON: A number of US business economists appear sufficiently concerned about the risks of some of President Donald Trump’s economic policies that they expect a recession in the US by the end of 2021.

Thirty-four percent of economists surveyed by the National Association for Business Economics, in a report being released Monday, said they believe a slowing economy will tip into recession in 2021. 

That’s up from 25 percent in a survey taken in February. Only 2 percent of those polled expect a recession to begin this year, while 38 percent predict that it will occur in 2020.

Trump, however, has dismissed concerns about a recession, offering an optimistic outlook for the economy after last week’s steep drop in the financial markets and saying on Sunday, “I don’t think we’re having a recession.” A strong economy is key to the Republican president’s 2020 reelection prospects.

The economists have previously expressed concern that Trump’s tariffs and higher budget deficits could eventually dampen the economy.

The Trump administration has imposed tariffs on goods from many key US trading partners, from China and Europe to Mexico and Canada. 

Officials maintain that the tariffs, which are taxes on imports, will help the administration gain more favorable terms of trade. But US trading partners have simply retaliated with tariffs of their own.

Trade between the US and China, the two biggest global economies, has plunged. Trump decided last Wednesday to postpone until Dec. 15 tariffs on about 60 percent of an additional $300 billion of Chinese imports, granting a reprieve from a planned move that would have extended duties to nearly everything the US buys from China.

The financial markets last week signaled the possibility of a US recession, adding to concerns over the ongoing trade tensions and word from Britain and Germany that their economies are shrinking.

The economists surveyed by the NABE were skeptical about prospects for success of the latest round of US-China trade negotiations. Only 5 percent predicted that a comprehensive trade deal would result, 64 percent suggested a superficial agreement was possible and nearly 25 percent expected nothing to be agreed upon by the two countries.

The 226 respondents, who work mainly for corporations and trade associations, were surveyed between July 14 and Aug. 1. That was before the White House announced 10 percent tariffs on the additional $300 billion of Chinese imports, the Chinese currency dipped below the seven-yuan-to-$1 level for the first time in 11 years and the Trump administration formally labeled China a currency manipulator.

As a whole, the business economists’ recent responses have represented a rebuke of the Trump administration’s overall approach to the economy.

Still, for now, most economic signs appear solid. Employers are adding jobs at a steady pace, the unemployment rate remains near a 50-year low and consumers are optimistic. US retail sales figures out last Thursday showed that they jumped in July by the most in four months.