Gulf stock markets fell back yesterday because of lower oil prices and a lack of positive drivers, while Saudi Arabia’s bourse failed to get an immediate boost from reforms designed to stimulate trading and draw fresh foreign money.
Brent crude futures fell about 1% yesterday after a 3% drop on Monday, encouraging Gulf investors to take profits on stock market gains made over the past several weeks.
The Saudi index fell 1.2% as petrochemical blue chip Saudi Basic Industries lost 2.4%.
Jarir Marketing fell 1.5% and Saudi Hollandi Bank lost 1.9% as both stocks went ex-dividend.
The Capital Market Authority said it would lower the minimum assets-under-management requirement for foreign institutions investing directly in the market, and ease foreign ownership restrictions. For example, each foreign investor will be allowed to own a stake of just under 10% of a single company; previously, the ceiling was 5%.
Meanwhile, the Saudi Stock Exchange said it would introduce the settlement of trades within two working days of execution, a reform that could help the market join MSCI global indexes. Currently, settlement is same-day, which is inconvenient for many foreign investors.
The reforms will not be implemented before 2017, and other factors such as high valuations and low oil prices have also been deterring foreign investors, so the market did not react.
Dubai’s index sank 1.8%, while Abu Dhabi dropped 2.0% as some banks remained soft after last week’s disappointing first-quarter earnings, with Abu Dhabi Commercial Bank losing 4.3%.
Egypt’s market, reopening after two days of public holidays, tumbled 3.1% after the April purchasing managers’ index for that country showed new orders and output continuing to decline, while the Egyptian pound slipped further in the black market.
Orascom Telecom Media sank 6.8%, continuing a slide triggered by its reporting a big loss for 2015 late last week.
Elsewhere in the Gulf, Kuwait’s index edged up 0.1% to 5,375 points; Oman’s index rose 0.5% to 5,984 points, while Bahrain’s index fell 0.3% to 1,109 points. Page 4
A trader uses his mobile as he monitors screens displaying stock information at the Saudi Stock Exchange in Riyadh (file). The Saudi index fell 1.2% yesterday as petrochemical blue chip Saudi Basic Industries lost 2.4%.
