The shares of Saudi Basic Industries Corp, the largest listed petrochemical producer, dropped 1%
Jeddah - Arab Today
Brent oil futures edged down below $39 a barrel on Tuesday, igniting a broad sell-off in Gulf stock markets.
The petrochemical sector was the main drag with Saudi Arabia’s Tadawul All-Share Index falling 0.9 percent to 6,233 points. Saudi Basic Industries Corp, the largest listed petrochemical producer, dropped 1.0 percent.
But construction company Khodari added 1.7 percent after it announced that it had received SR9.1 million ($2.4 million) as compensation from the state’s Human Resource Development Fund for the impact of labor reforms. The gain will be booked in the first quarter of 2016, the company said.
Saudi Arabia’s government is opening a fresh austerity drive by ordering ministries to cut their spending on contracts by at least 5 percent, a document seen by Reuters shows.
The cuts could further slow economic growth and hurt the construction industry, where many companies are struggling with deteriorating cash flow and rising labor costs.
Profit-taking by local traders in speculative shares pulled Dubai’s index down 0.9 percent.
Builders Arabtec and Drake & Scull each dropped more than 6.0 percent, while Dubai Parks tumbled 2.9 percent. All three shares, favored by local traders, had risen more than 16 percent since mid-February.
Abu Dhabi’s benchmark dropped 2.1 percent as the largest listed bank on the exchange, First Gulf Bank, traded ex-dividend; it fell 9.8 percent.
Other blue chips also sold off; Union National Bank, which went ex-dividend on March 10, fell 5.0 percent.
Last month, the lender announced that it had trimmed its 2015 cash dividend from the prior year.
In Qatar, the index fell 1.1 percent; Qatar Gas Transport and drilling rig provider Gulf International Services declined 6.5 and 4.9 percent respectively. The largest listed bank by market value, Qatar National Bank, fell 1.4 percent.
Egypt’s stock market rose for a second straight day on Tuesday after the country’s central bank devalued the currency.
Cairo’s index climbed 1.9 percent to 7,140 points, rising above technical resistance at this year’s peak of 7,114 points. A second straight close above that level would confirm a break, pointing up to the October peaks around 7,700 pounds.
But while trading volume was active, it almost halved from the extraordinarily high seen on Monday, when the index soared 6.7 percent after the central bank devalued the pound to 8.85 per US dollar from 7.73.
The devaluation raised hopes that a cheaper pound would attract more capital to Egypt and eventually resolve its endemic foreign exchange shortage.
Prime Investment Research argued in a report that hard currency inflows due to the devaluation, especially from foreign direct investment and tourism, would boost Egypt’s net foreign reserves to $24 billion by 2020, from about $16.5 billion now. It noted that a previous devaluation in 2003 was followed by a sharp rise in reserves.
But it added that the devaluation was unlikely to lead to an export boom, partly because of weakness in Egyptian export markets in the Middle East.
Furthermore, many analysts expect the currency to slide further this year, a prospect which could delay hoped-for capital inflows, while interest rates could be hiked as soon as on Thursday to fight increased inflation due to the weak currency.
El Sewedy Electric jumped 3.6 percent after it reported that it earned 1.351 billion Egyptian pounds ($153 million) in 2015 versus 445 million pounds a year earlier. Juhayna Food, another exporter, rocketed 9.1 percent.
Real estate shares, which could be bought as a hedge against inflation fueled by the devaluation, faired well; Talaat Mostafa jumped 9.8 percent.
But some blue chips fell after rising strongly on Monday.
They included Commercial International Bank, which fell 0.8 percent after a 6.8 percent gain on the previous day.
Source: Arab News