Saudi Arabia Leads Gulf Stock Drop as Traders Wait on Oil Meet

  • Kuwaiti equities climb even as oil workers go on strike
  • Israeli gas shares advance; Egyptian gauge climbs third day

Saudi Arabian stocks led declines across most Gulf Arab equity markets as investors await the outcome of a gathering of major oil producing nations in Doha.

The Tadawul All Share Index dropped 1.5 percent, the most in two weeks. Dubai’s DFM General Index lost 0.7 percent as the Bloomberg GCC 200 Index, which tracks the largest and most liquid shares across the six-nation Gulf Cooperation Council, retreated 0.8 percent. Abu Dhabi’s ADX General Index extended gains a seventh day, adding 0.5 percent.

At least 16 nations representing about half the world’s oil output, including Saudi Arabia and Russia, are gathering on Sunday in the Qatari capital to discuss limiting production in a bid to shore up prices. Equities in the GCC are tied closely to the price of oil, which generates the bulk of government revenue in the region.

“Investors are apprehensive about taking new positions before the results of the meeting,” said Nabil Farhat, an Abu Dhabi-based partner at Al Fajr Securities. “We might see a spike in prices in either direction depending on the results of the meeting."

Brent crude, a benchmark for half the world’s oil, has dropped three days in the lead up to the meeting, and closed last week at $43.10 per barrel.

Saudi Slides

Saudi stocks were led lower by Jabal Omar Development Co., which slid 2.8 percent. Saudi Basic Industries Corp., one of the world’s biggest petrochemicals manufacturers, fell 1.2 percent after a fire at a plant owned by one of its units. The blaze killed 12 and injured 11, al-Sharq newspaper reported, citing unidentified people.

Banque Saudi Fransi declined 3.3 percent, even after the bank reported a 2.7 percent increase in first-quarter profit, beating analysts’ estimates. National Bank of Abu Dhabi PJSC’s brokerage unit cut the lender to hold from accumulate.

Saudi Kayan Petrochemical Co. climbed 1.9 percent, the most in a month, after reporting a narrower than expected loss in the first quarter. About 53 million shares traded, or almost three-times the three-month average.

The retreat came even as Deputy Crown Prince Mohammed bin Salman said Saudi Arabia will this month announce its comprehensive plan to prepare for the post-oil era. The plan to transform Saudi Aramco from an oil company into an energy and industrial conglomerate, as well as the future of the Public Investment Fund, will be part of the vision, he said.

About 328 million shares traded in the kingdom, 18 percent above the 20-day intraday average.

Dubai Overbought

Dubai’s benchmark measure has gained 12 percent this year, sending its relative-strength index to 71 on Thursday, above the level of 70 that signals to some analysts a security may be overbought. It closed at 67.

Shuaa Capital PSC, an investment company based in the emirate, surged 9.7 percent after five days declining, pushing the share’s 14-day RSI to 71.

Abu Dhabi’s gauge posted the longest winning streak in more than a month as trading volumes jumped to 46 percent above the 20-day average. More than half of those shares, 95 million, were in Dana Gas PJSC, which advanced 3.6 percent. The shares have gained 12 percent this month as the company said it’s receiving payments in Iraq and after reports its partner and main shareholder is in talks to start receiving gas from Iran.

Kuwait Strike

Kuwait’s SE Price Index added 0.3 percent, even as about 40 percent of oil workers in the country went on strike, CNBC Arabia reported, citing the head of the country’s oil workers union. Kuwait’s crude production tumbled by 60 percent and its refineries scaled back operations.

Oman’s MSM 30 Index fell 0.4 percent, Qatar’s QE Index lost 0.5 percent and Bahrain’s BB All Share Index was little changed.

Egypt Protests

Egypt’s EGX 30 Index advanced 0.7 percent. EFG-Hermes Holding, the country’s biggest investment bank, was the largest contributor to the gains with a 2.5 percent increase.

Police fired tear gas to disperse several thousand Egyptians who took to the streets of Cairo on Friday in the first major protest since President Abdel-Fattah El-Sisi’s election in 2014. The demonstrations followed the transfer of sovereignty of two Red Sea islands to Saudi Arabia. Protesters called for a second round of demonstrations on April 25.

The protests were “of small magnitude, hence the lack of reaction in the market," said Mohamed Radwan, the head of equities at Cairo-based Pharos Holding. “But we have to be cautious going forward, because if we see escalation, stocks will likely respond."

Israeli Gas

Israel’s TA-25 Index rose for a third day, gaining 1 percent to 1,489.18 at the close in Tel Aviv, the highest since Jan. 13. The country’s gas explorers helped drive the advance, with Delek Drilling rising 6.4 percent. The company and Avner Oil Exploration set up a panel to examine a potential merger. Avner gained 2.4 percent.

“The possible merger will help save costs and is expected to lead to more efficient operations,” Steven Shein, a Tel Aviv-based trader at Psagot Investment House Ltd., said by phone.

The country’s Central Bureau of Statistics on Friday said consumer prices dropped for a 19th month, declining 0.7 percent from a year earlier. Israel’s benchmark government bonds due 2025 climbed 0.35 agora, the most in almost two weeks, to 100.97 agorot on the shekel on Sunday. The yield fell three basis points to 1.77 percent.

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