Israel Stocks Buck Mideast Rally Amid Clashes; Saudi Shares Jump

  • Most regional markets gain after oil, global shares advance
  • Israeli air force strikes Gaza in retaliation for rocket fire

Israeli stocks fell as confrontations with Palestinians intensified, even as most markets in the Middle East advanced. Saudi Arabian stocks rallied, led by Saudi Basic Industries Corp., the Gulf’s biggest petrochemicals maker.

The TA-25 Index retreated 0.2 percent and declines in government bonds sent yields up for the first time in more than a week. Saudi Arabia’s Tadawul All Share Index led regional gains, advancing a sixth day.

Israel’s air force struck the Gaza Strip in retaliation for rocket fire, and a car bomb was directed against an Israeli policeman outside Jerusalem. Tensions have flared over contesting claims to a Jerusalem shrine holy to Jews and Muslims.

Israel’s index underperformed “global markets with the ongoing wave of terror attacks on investors’ minds,” said Saar Golan, a trader at Bank of Jerusalem Ltd. in Tel Aviv. “We don’t believe we are yet over this wave of violence, and the uncertainty is keeping buyers away.”

Bank Leumi Le-Israel led the drop, closing at the lowest level since Oct. 1. Bank Hapoalim retreated the most in more than two weeks. The yield on government notes due 2025 rose three basis points to 2.17 percent.

Shares of Delek Group Ltd., Israel’s largest publicly-traded energy company, rose as much as 0.9 percent after one of its subsidiaries acquired one-fifth of Canada’s Ithaca Energy Inc. They closed little changed.

Saudi Gains

Elsewhere in the Middle East, most equity gauges rallied after U.S. and European shares rebounded and oil posted the best week since August. Brent crude gained 9.4 percent last week to $52.65 per barrel. The six-nation Gulf Cooperation Council is home to about 30 percent of the world’s proven oil reserves and most governments rely on income from crude to fund spending.

The Tadawul added 1.9 percent to extend its winning streak, now the longest since April. Saudi Basic Industries led the gains, jumping 3.7 percent to the highest in almost two months. The company is reorganizing its corporate structure in a bid to create a more agile and cost-efficient organization, the petrochemicals maker said after markets closed on Thursday.

Saudi Kayan Petrochemical Co., which is 35 percent owned by Sabic, rose as much as 9.8 percent as traders exchanged 3.3 times more shares than the three-month daily average. National Agriculture Development Co. climbed 8.1 percent to the highest in two months after third-quarter net income increased 33 percent to 45.7 million riyals ($12.2 million).

GCC Rally

Dubai’s DFM General Index rose 0.2 percent, Kuwait’s gauge advanced 0.3 percent and Abu Dhabi’s ADX General Index added 0.4 percent. Oman’s MSM30 Index climbed 1.1 percent, its biggest jump since Aug. 30, and Qatar’s QE Index gained 0.9 percent. Bahrain’s BB All Share Index was unchanged after three days of declines.

"With no specific factors of their own, the regional markets are being influenced by global markets and what happens to oil prices," said Muhammad Shabbir, who manages about $550 million as the head of regional equities at Rasmala Investment Bank Ltd. in Dubai. If the Federal Reserve “continues to take no action on rates and oil trades at the upper end of the $45 to $55 range, we hope that the market will add a bit," he said.

The Bloomberg GCC 200 Index, made up of the region’s biggest and most liquid shares, rose 1.1 percent for a sixth day of gains. That pushed it above its 50-day moving average for the first time since July.

Egyptian Advance

Egypt’s EGX 30 Index added 0.8 percent to 7,547.66, the highest in almost two months. The measure’s 14-day relative strength gauge rose to 61 points, the highest level since May.

The government is in talks with the World Bank and African Development Bank to secure $1.5 billion in loans to replenish its foreign-currency reserves, Prime Minister Sherif Ismail said yesterday. The nation’s net foreign reserves slumped the most in almost four years in September, weakening the pound in black-market trading to a record.

Beltone Financial Holding surged for a second day, gaining 8.5 percent, after billionaire Naguib Sawiris’s Orascom Telecom Media & Technology Holding made an offer to buy the investment bank subject to completion of due diligence. The stock is up 30 percent since the announcement last week.

Fatal Bombings

Turkish assets may face selling pressure when they begin trading on Monday, after bombings in Ankara, the Turkish capital, killed at least 95 people yesterday. Stocks, bonds and the lira have been battered this year as the country has been drawn into violence in neighboring Syria, and after the breakdown of a truce with Kurdish militants.

Political uncertainty surrounding the second parliamentary election in six months has added to the selloff. Turkey’s lira has lost 20 percent of its value against the dollar in 2015, and yields on government debt are up by almost 300 basis points.

“Turkey has largely been insulated from geopolitical events in the region but the fatal bombings over the weekend changes that," said Doug Bitcon, a Dubai-based fund manager at Rasmala Investment Bank Ltd. “Investors will rightly be asking themselves whether this is an isolated incident and whether this will lead to Turkey being drawn further into the Syrian conflict.”

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