Saudi shares drop on global outlook, insurance probe

Reuters/Dubai

Saudi Arabia’s bourse dropped for a fifth straight session as a further fall in oil prices and weak global markets weighed on shares. Insurance stocks slumped as the financial regulator probed possible market manipulation, according to traders.

Brent crude slid towards $99 per barrel yesterday because of the prospect of sluggish fuel demand in the US and China, and rising stockpiles of US crude.

This hurt petrochemical shares; Saudi Basic Industries Corp (Sabic) dropped 1.4%, dragging down the main index, which was 0.5% lower yesterday.

The insurance sector’s index sank 5.2% after the Capital Market Authority launched a probe into potential market manipulation by some investors, traders said. Insurance stocks are a favourite target of shorter-term speculation; there was no immediate comment from the CMA.

“A CMA inspection into illegal trading caused a deep correction in speculative stocks,” said Mohammad Omran, an independent financial analyst based in Riyadh. “The inspection rang a bell that there is a watchdog.”

In Kuwait, the measure rose 0.6% to 7,086 points, a fresh 29-month high, as investors increased positions ahead of first-quarter earnings.

The market resumed gains after a dip earlier this week when a prominent Kuwaiti opposition politician was sentenced to five years in jail for insulting the emir.

 “The market is oblivious to political instability and this is adding to the favourable sentiment, which should propel the market further towards the 7,500 level that many thought unattainable,” said Fouad Darwish, head of brokerage at Global Investment House.

National Bank of Kuwait, which reported flat net profit for the first quarter after the market closed but said its operating environment was improving, fell 1.1%.

In Dubai, the index snapped a three-session losing run, gaining 0.1%, as bargain-hunters returned ahead of first-quarter numbers. The market was led by budget carrier Air Arabia, which jumped 4.7% — its biggest one-day hike since February 2012.

“What has surprised some of us is that there has been an increase in volumes earlier than thought — usually people price in Q1 earnings towards the end of April,” said an Abu Dhabi-based trader who asked not to be identified.

Investors are betting on strong earnings growth, not just for the first quarter but for the year ahead, he added. Most United Arab Emirates companies have yet to report their quarterly numbers.

In Dubai the index gained 0.1% to 1,970 points and the Abu Dhabi index declined 0.1% to 3,091 points.

Oman’s bourse dipped 0.1% as heavyweight Bank Muscat slumped 1.1% after posting a 25% drop in first-quarter earnings. The bank was forced to take a one-off 15mn rial ($39mn) provision after suffering card fraud in February.

In Egypt, the measure fell 0.7% to 5,259 points and the Bahrain index was flat at 1,092 points.