JEDDAH/DUBAI: Middle East bank stocks slumped on Tuesday following further disappointing results from Saudi Arabia lenders, while other sectors also declined as sentiment soured regionally and globally.
Dubai fell 2.4 percent, Qatar made its biggest one-day loss for five weeks, Saudi Arabia fell for a third day and Kuwait and Abu Dhabi also declined. Egypt, Oman and Bahrain all rose.
Saudi Arabia’s Al-Jazira Bank slipped to a nine-month low its fourth-quarter losses widened, while smaller rival Arab National Bank also ended lower after its net profit fell. Saudi Hollandi Bank and Banque Saudi Fransi both declined for a second day since reporting below-forecast earnings.
Across the Middle East, about five times as many bank stocks declined as advanced. “The lead from Saudi banks was negative, Asia was weaker and oil has slipped, so a flat-to-negative day (was) to be expected,” said Ian Munro, MAC Capital head of research.
The Kingdom’s Tadawul All-Share Index (TASI) closed on Tuesday at 6,266.26 points, losing 25.13 points. Sector activity was widely negative with 10 out of 15 sectors closing with losses ranging from 0.02 percent by the real estate development and transport sectors to 1.57 percent by the hotel and tourism sector. Gains were seen in the remaining five sectors ranging from 0.02 percent by the retail to 2.43 percent by the multi-investment sector.
The overall market breadth remained widely negative with only 22 advancers against 85 decliners giving an AD ratio of 0.2588, the Financial Transaction House (FTH) said in its daily market commentary.
Musa Haddad, head of MENA equity desk at National Bank of Abu Dhabi, said he was bullish on the bank sector’s prospects.
“Saudi Arabia is holding pretty well and looks good, we’re still positive on the market so long as it holds above 6,150 to 6,200 points,” said Haddad. “It could be the banking sector that leads a rally in Saudi Arabia, despite the bad figures.”
The immediate outlook for the Dubai bourse appeared bleaker, however, after late-selling sent stocks tumbling.
Arabtec extended its slump, falling 5 percent to take its losses to 15 percent since saying it would sell a majority stake to Aabar Investments in a deal that will dilute existing holdings. Aabar fell 0.4 percent.
“Investors are bearish in the short-term for Arabtec because of the dilution effect, but there is value for medium- to long-term, so investors want to sell at current levels and then buy back once the dilution has taken place,” said Marwan Shurrab, vice president at Gulfmena Alternative Investments.
Emaar Properties fell 4.4 percent to a three-week closing low, taking its losses to 10 percent since hitting a six-week high on Jan. 4.
“People don’t want the stock,” said NBAD’s Haddad. “Even though Emaar went up, it was on small volumes and didn’t break any new resistances and is trading below short, medium- and long-term moving averages, which signals people are exiting.”
In Doha, investors dumped merger targets Barwa Real Estate and Qatar Real Estate (Alaqaria). Barwa dropped 5.8 percent to a five-month low and Alaqaria fell 4.9 percent.
“Like all other markets we are waiting for a lead from financial results,” said Mohamed Abu Ghoush, head of equities brokerage at Al-Ahli Bank.
Oil fell below $82 a barrel, slipping from Monday’s 15-month high. World stocks dropped and Wall Street looked set for a poor start as investors digested early results from the US and European that came in below estimates.
— With input from agencies
