Eurozone worries drag Saudi stocks

Reuters/Dubai

Renewed worries about the eurozone’s debt crisis dragged Saudi Arabia’s bourse to a two-week low, while other Middle East markets rallied yesterday to extend early-year gains.

The Kingdom’s large-caps declined, including Al Rajhi Bank and telecom operator Etihad Etisalat (Mobily), which fell 1.1 and 1.3% respectively.

Saudi’s main benchmark fell 0.5% to 6,993 points, its lowest close since January 21. It failed to hold above 7,000, a key psychological level.

“The market is taking cues from global events and it was looking heavy around 7,000,” said Mohammad Faisal Potrik, a research analyst at Riyad Capital. “Investors were being cautious on a neutral local backdrop.”

Saudi investors often look to global markets for their cues when there is little local news to trade on.

Elsewhere, Cairo’s market made a fifth straight gain, rising 0.8% to its highest close since January 9 as foreign investors - unswayed by Egypt’s volatile political backdrop - increased positions. Trading volumes hit a three-month peak. Orascom Construction Industries advanced 0.8% and Commercial International Bank climbed 0.4%.

In the UAE, Dubai’s benchmark rose 0.2%, extending 2013 gains to 15.2%, and Abu Dhabi’s index hit a fresh 34-month high, with banks the main supports on both markets.

Many of the country’s lenders posted strong quarterly earnings as provisions decreased and their stocks are expected to provide high dividend yields.

“We think shifting to high dividend stocks in the upcoming volatile environment is a safe option as they are expected to perform better than the rest of the market,” Al Masah Capital said in a note.

Abu Dhabi’s index rose 0.4% to 2,901 points.

In Kuwait, the measure climbed 0.5% to an 8-month high as investors bet government spending plans will be put into action.

“We suspected a bit of government activity yesterday on a few stocks but today the trading is mainly retail,” said a Kuwait-based trader who asked not to be identified.

“The government doesn’t seem to be holding back anything but we’re looking for a proper spending plan to tackle the macro situation.”

Under a four-year plan expected to end in 2014, the government is supposed to spend 30bn dinars ($107bn) on industrial and infrastructure projects.

Ahli United Bank jumped 4.6% to a near 11-month high after the bank said it made a profit of $212.9mn on a stake sale in Qatar’s Ahlibank.

Elsewhere in the Gulf, Oman’s index advanced 0.4% to 5,837 points, while Bahrain’s index climbed 1.3% to 1,100 points.

King Abdullah replaces market regulator head

Saudi King Abdullah has replaced the head of the kingdom’s capital market regulator, the Capital Market Authority (CMA), through a royal decree, state news agency SPA reported yesterday.

The CMA was set up by King Abdullah as part of a series of reforms aimed at deregulating Saudi Arabia’s financial services industry and capital markets.

“Abdulrahman al-Tuweijri, chairman of the Capital Market Authority, is relieved of his post and Mohammed bin Abdulmalik Al al-Sheikh is appointed as chairman of the authority,” said the decree carried by SPA.