JEDDAH/DUBAI: Dubai led most Middle East markets lower on Monday as investors booked profits from the previous day’s two-week high and analysts warned further declines are likely, although Saudi Arabia was buoyant as oil prices spiked.
Saudi Basic Industries Corp (SABIC) hit a 14-month closing high after oil prices reached their highest level since late October, helping the Tadawul All-Share Index (TASI) make minor gains for a third day.
Dubai’s index fell 2.6 percent, Kuwait’s benchmark dropped 1.6 percent in its biggest one-day loss for five weeks and Qatar’s bourse declined for the fourth session in five. Oman and Bahrain also fell, while Egypt rose.
“The market had been going up for a few days before the year-end so it’s natural to see some profit taking,” said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments in Dubai.
Emaar Properties fell 3.4 percent ahead of the official opening of Burj Dubai, the world’s tallest structure. The firm’s shares jumped almost 8 percent the day before, but traders were little moved by the firm saying it would make a 10 percent return on the tower.
Dubai’s loss was its largest for nearly two weeks, while Monday’s relatively large volume was a worry for some analysts.
“The market has given a bearish signal — the way it was sold says it is going lower and is still below the 50-day moving average,” said Musa Haddad, head of MENA equity desk at National Bank of Abu Dhabi.
“It’s mainly speculators — institutions are not in the market, if they were they wouldn’t be selling this aggressively. Any rally is an opportunity to sell, not to buy.”
In Saudi Arabia, the market experienced an overall positive sentiment on Monday, with losses in only four sectors — building and construction, energy and utilities, telecom and IT and Insurance, which were down 0.03 percent, 0.05 percent, 0.29 percent and 1.59 percent respectively. Positive sector closes ranged from 0.08 percent in the multi-investment sector to 2.07 percent in the petrochemical Industries sector. Overall market breadth was positive, with 68 advancers and 52 decliners recording an AD ratio of 1.31, the Jeddah-based Financial Transactions House (FTH) said in its daily market commentary.
SABIC climbed 3.3 percent after oil surged more than 2 percent intraday to above $81 a barrel, its highest level since Oct. 26. Rising oil prices give Saudi petrochemical producers an advantage over rival manufacturers from higher tax countries.
The Tadawul index climbed 0.8 percent to 6,202 points, though volumes were below 100 million shares for a fifth session. “For Saudi Arabia, 6,100 is a very significant level — a break below that could see a fall to 5,800 to 5,900 points,” said NBAD’s Haddad. “The market is moving sideways so it’s better to wait for the fourth-quarter figures.”
Kuwait’s bluechips were hammered. Agility plunged 8.8 percent to a 49-week closing low, while Zain dropped 5.9 percent. The latter has now fallen 30 percent since Sept. 8, the day major shareholder the Kharafi group said it had agreed a deal to sell a 46 percent stake in the telecoms operator.
“We were told the takeover would take four months, so most expectations are that the deal will now not take place,” said Naser Al-Nafisi, general manager for Al-Joman Center for Economic Consultancy in Kuwait.
More than 30 Kuwait stocks fell more than 5 percent in a broad-based sell-off.
“On the last two days of the year, investors pushed the market up above 7,000 points, now it’s the New Year prices are correcting from these artificial levels,” added Nafisi. “After every quarter and especially the end-of-year, investors try to push up prices to increase the value of their portfolios.”