Gulf Stocks Mixed as Ramadan Heralds Trading’s ‘Empty Period’

  • ‘Very few opportunities’ seen in current market: Mena Corp.
  • Reduced working hours across GCC slows business during Ramadan

Gulf stocks were mixed as trading slumped in advance of the holy month of Ramadan, when business across the region slows.

Dubai’s DFM General Index advanced 0.7 percent at the close and Abu Dhabi’s ADX General Index climbed 1 percent. The Bloomberg GCC 200 Index, which tracks 200 of the largest and most liquid stocks in the six-nation Gulf Cooperation Council, slipped 0.3 percent and Saudi Arabia’s Tadawul All Share Index fell 1.2 percent. The number of shares trading on Dubai’s index was 55 percent below the 20-day average. 

“This is an empty period,” said Muhammad Shabbir, the Dubai-based head of equities and funds at Rasmala Investment Bank Ltd. “There is general lack of catalysts for the market to move. We expect it to remain sideways until at least early July,” ahead of second-quarter earnings.

Emerging-market stocks last week climbed to a one-month high as expectations for a June interest-rate increase in the U.S. receded and an inconclusive OPEC meeting stoked a decline in oil prices. Ramadan, which starts this week, typically heralds a slowdown in trading activity across the region as many Muslims fast all day and work reduced hours.

Eshraq Trading

Investors are staying on the sidelines as the holy month begins, said Hisham Khairy, the Dubai-based head of institutional trade at Mena Corp. Financial Services LLC, one of the United Arab Emirates’ largest brokerages.

There are “very few opportunities” in the market, he said.

Even though Eshraq Properties Co.’s price was unchanged, 89 million shares changed hands, more than any other company across GCC stock indexes. It accounted for 75 percent of volume on Abu Dhabi’s ADX General Index, where investors traded only a third of the gauge’s 61 members.

Abu Dhabi National Energy Co. slipped 1.7 percent. The company known as Taqa said Saeed Hamad Al Dhaheri, executive vice president for business support, will be acting chief operating officer until a replacement is found for Edward LaFehr, who is leaving to be closer to his family in U.S.

Dirham Peg

Emirates NBD PJSC, the U.A.E.’s largest bank by assets, increased 0.5 percent. The lender is seeking to buy Barclays Plc’s Egypt operation, according to people familiar with the plan.

One-year dirham forwards climbed 22.5 points last week to the highest level since March, signaling increased bets the U.A.E. may devalue its currency against the dollar. Governor Mubarak Rashed Al Mansoori on Sunday said the country remains committed to the peg said and the U.A.E. will follow any increase in the U.S. interest rate.

Saudi Forwards

Kuwait’s SE Price Index and Bahrain’s BB All Share Index both slipped 0.1 percent, Oman’s MSM 30 Index was little changed. Qatari stocks added 0.4 percent with trading 26 percent below the average.

In Saudi Arabia, Rabigh Refining and Petrochemical Co., an integrated refining company, declined 1.8 percent. It awarded a 563 million-riyal ($150 million) clean fuel project to KT SpA. Mobile Telecommunications Co., the company known as Zain Saudi, jumped 9.4 percent, the most in more than two months. Zain said it refinanced a 2.25 billion riyal commercial loan.

One-year forwards for the riyal rose 60 points on Friday, the most in more than a week, after the kingdom was said to order banks to stop selling some products that allow speculators to bet against its currency peg. Authorities are cracking down on traders as speculation mounts the world’s biggest oil exporter won’t be able to maintain the riyal’s fix to the dollar.

Dollar Shortage

In Cairo, Egypt’s EGX 30 Index retreated 0.7 percent. Commercial International Bank Egypt, which makes up almost 40 percent of the gauge, was the biggest contributor to the decline, losing 0.6 percent.

Investors continue to use arbitrage transactions on the stock as a means of buying dollars amid a foreign-currency shortage in the North African country, pushing the ratio of the lender’s London-traded shares to 31.75 percent of its total capital. The maximum allowed under the Egyptian exchange’s rules is 33 percent.

Israel Gas

Israel’s TA-25 Index dropped 0.1 percent at the close in Tel Aviv, while the Tel Aviv Oil and Gas Index rose 0.4 percent. Delek Drilling - LP, a gas explorer in the Leviathan field, said the estimate for the site remains unchanged at 21.9 trillion cubic feet. The company added 1.1 percent.

The country’s 1.75 percent benchmark bonds due in 2025 increased the most since May 1, pushing the yield down five basis points to 1.72 percent.

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