Financial shares drag most Gulf markets, Dubai lead losses

The Tadawul index has reduced its gains for the year to 2.9 percent as the US-China trade dispute and regional geopolitics hurt investor sentiment. (AFP)
Updated 08 September 2019

Financial shares drag most Gulf markets, Dubai lead losses

  • The market’s 2019 gains were as high as 20 percent in May

DUBAI: Most Gulf markets fell on Sunday, pulled down by financial shares, while Dubai’s stock market unperformed regional peers as its top lender Emirates NBD broke a four-day winning streak.

In Saudi Arabia, the index reversed course to close roughly flat as financial stocks also slipped back into negative territory. Samba Financial Group and Saudi British Bank both fell 2.4 percent. 

The market’s 2019 gains were as high as 20 percent in May, outperforming most regional markets ahead of the inclusion of Saudi stocks in the MSCI that attracted billions of dollars from foreign investors, who have been net buyers every month this year. 

However, the index has reduced its gains for the year to 2.9 percent as the US-China trade dispute and regional geopolitics hurt investor sentiment. 

Middle East funds plan to reduce investment in Saudi Arabia, a Reuters poll showed late last month. 

Dubai’s index closed 0.7 percent lower with Emirates NBD falling 2.9 percent. The bank’s shares have risen in recent sessions after NBD raised its foreign ownership limit to 20 percent from 5 percent and announced its intention to further hike the limit to 40 percent in future. 

Dubai’s developers also weighed on the index as DAMAC Properties and contractor Arabtec Holding both shed 1.2 percent. 

Dubai house prices are expected to decline sharply this year and next as a slowdown in the economy and an oversupply of housing units pose big downside risks to their already weak outlook, a Reuters poll found.

Dubai’s property prices have contracted by 25-35 percent since a mid-2014 peak.  In Abu Dhabi, the index was down 0.2 percent in a drag led by market heavyweight Abu Dhabi Commercial Bank, which lost 1.6 percent. 

However, Al Dar properties closed 0.9 percent up after launching a residential project on the Saadiyat Island that it said would be open to all nationalities. 

This is the first development on the Saadiyat Island since the introduction of new laws enabling foreign buyers to own freehold land in investment zones in Abu Dhabi. 

In April, Abu Dhabi amended its real estate law allowing foreigners to own land and property in investment areas on a freehold basis. 

Qatar’s index closed 0.2 percent higher with blue-chip petrochemical maker Industries Qatar and Masraf Al-Rayan gaining 1.5 percent and 1.4 percent, respectively. 

Egypt’s blue-chip index traded flat amid a couple of weak corporate earnings. 

Cleopatra Hospital fell 2.7 percent after posting a 38.7 percent decline in the second-quarter profit, while Egyptian Resorts lost 1 percent after reporting a wider loss for the same period.

Oil surges, stock futures slip after attack on Saudi facility

Updated 23 min 40 sec ago

Oil surges, stock futures slip after attack on Saudi facility

  • Oil prices surge on fears of global supply disruption
  • Safe haven gold, Japanese yen rise, stock futures slip

SYDNEY, Australia: Oil prices surged to six-month highs on Monday while Wall Street futures fell and safe-haven bets returned after weekend attacks on Saudi Arabia’s crude facilities knocked out more than 5% of global oil supply.
US crude futures were last up 11% at $61.10 a barrel, coming off highs on expectations other global oil suppliers would step in to lift output. Brent crude soared 13% at $68.06 after earlier rising to $71.95.
Yemen’s Iran-backed Houthi rebel group had claimed responsibility for the attack, which hit the world’s biggest oil-processing facility but a senior US official told reporters on Sunday that evidence indicated Tehran was behind it.
The attacks heightened investor worries about the geopolitical situation in the region and worsening relations between Iran and the United States.
Those fears powered safe-haven assets with prices for gold climbing 1% in early Asian trade to $1,503.09.
Moves in Asian share markets were small, however, with Japan shut for a public holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was a tick lower at 515.4. Australian shares were down 0.1% while South Korea’s KOSPI was a tad higher.
E-Minis for the S&P 500 were off 0.4% while those for the Dow eased 0.3%.
“If risk appetite collapses due to fears of worsening middle east tensions in the wake of any retaliation to the drone attacks, some emerging markets could face a double whammy of pressures,” said Mitul Kotecha, Singapore-based senior emerging markets stratgist at TD Securities.
“In Asia, the most risk sensitive currencies are Indian rupee, Indonesian rupiah and Philippine peso .”

Bonds and currencies
Among major currencies, the Saudi news pushed the yen up 0.4% to 107.64 per dollar while the Canadian dollar rose 0.5% in anticipation of higher oil prices.
The euro was little moved near a three-week top while the pound hovered near Friday’s two-month highs. That left the greenback down 0.15% at 98.105 against a basket of six major currencies.
The risk-sensitive Australian dollar was down 0.5% against the yen, snapping nine straight days of gains. The kiwi dollar slipped to a one-week low on the yen.
“One immediate question this (attack) poses for bond markets is whether a further rise in the inflation expectations component of bond yields — which have proved historically sensitive to oil prices — will give this month’s sharp bond market sell-off fresh impetus,” Attrill added.
“Or will safe haven considerations dominate to drive yields lower? Watch this space.”
In early Asian trading, futures for US 10-year Treasury notes rose 0.3%, indicating yields may slip when cash trading begins.
Global bonds were sold off last week, sending yields higher, led by a broader risk rally on hopes the United States and China would soon end their long trade war. Better-than-expected US retail sales data also boosted sentiment.
Chinese data for industrial production, retail sales and fixed asset investment will be released later on Monday, which could help set the tone for this week’s trade.
Investors also await the outcome of the US Federal Reserve’s policy meeting on Wednesday at which it is widely expected to ease interest rates and signal its future policy path.