Reuters/Dubai
Agility fell 4% to its lowest close since September 27, despite denying the US move amounted to a new suit. Agility said it was instead a “procedural amendment” to an earlier case
Kuwait’s Agility tumbled to a 15-week low on Sunday after US prosecutors filed a civil lawsuit against the logistics operator.
Agility fell 4% to its lowest close since September 27, despite denying the US move amounted to a new suit. Agility said it was instead a “procedural amendment” to an earlier case.
On Friday, Reuters reported that US prosecutors had filed a civil suit against Agility, accusing it of defrauding the government over food product contracts to the US military in the Middle East worth $9.8bn. This follows a criminal suit, first filed in November 2009.
The latter led Agility to be replaced as the main regional supplier to US forces and the firm was barred from bidding for any new US contracts while the court case was pending.
“Most investors are fed up with the lack of transparency from Agility,” said Kareem Murad, an analyst at Shuaa Capital.
“Putting aside the legal case, the US prime vendor contract accounted for 40% of Agility’s revenues, with this contract also providing a 30% margin, but from January 1 this contract has gone to another company.
“So Agility is facing a substantial drop in its operational income and its bottom line could turn negative this year.”
Kuwait’s index fell 0.1% to 6,966 points, declining for a second day since Wednesday’s two-month peak, but Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy, said the market should remain steady, even if quarterly results fail to excite.
“Fourth-quarter earnings will be below the 2010 quarterly average because the stock market didn’t put in a good performance in Q4,” said Nafisi.
“But Q4 is over and I think most investors are looking to the future - capital expenditure from the government spending plan started last year and will increase in 2011, while oil is (near) $90, which will help support the government budget.”
In August, Kuwait’s government said the country’s banks could finance a 30bn dinar ($104bn) development plan.
Oman’s index climbed 0.3% to 6,950 points.
Bahrain’s measure fell 0.1% to 1,429 points.
Saudi Arabia’s index eased from Saturday’s eight-month peak, but this drop was seen as temporary.
“Saudi sentiment is pretty high - people are positioning themselves for good Q4 numbers from petrochemicals, so shares are holding firm despite oil dropping below $90,” said a Riyadh-based trader at an international bank.
Index heavyweight Saudi Basic Industries Corp (Sabic) fell 0.7%. The petrochemicals index fell 0.4%, although it remains up 17% in 12 months.