Gulf Stocks Retreat From Highest Level in More Than Three Weeks

  • Industries Qatar declines as profit slumps by 30 percent
  • Dubai's Emaar Properties defies downward move on tower plan

Stocks across the Gulf fell, following a drop in global markets, as traders cashed in on gains after a gauge of the region’s biggest companies climbed to a three-week high.

The Bloomberg GCC 200 Index, which tracks some of the six-nation Gulf Cooperation Council’s largest companies, slipped 0.8 percent from the highest level since Jan. 11. The Tadawul All Share Index was the region’s biggest decliner as it retreated 1.3 percent, followed by ADX General Index with a 0.9 percent drop. The MSCI World Index lost 1.6 percent on Friday.

“Markets have had a good run, now we’re seeing a bit of profit taking," said Wafic Nsouli, the managing director and head of equities at Dubai-based investment bank Arqaam Capital Ltd.

Stocks in the GCC have whipsawed this year as oil prices fluctuated and investors fretted about slowing economic growth in China, a major trading partner for the region. Brent crude, which accounts for most government income in the GCC, dropped a second day on Friday as growing U.S. crude stockpiles signaled a persisting global glut that’s proving a hurdle for any sustained rally. The Gulf is home to about 30 percent of the world’s proven oil reserves.

Saudi Troops

Saudi Arabia’s benchmark index posted its first slide in three days. Jabal Omar Development Co. and Saudi Basic Industries Corp. led the drop, falling 2.3 percent and 1.2 percent, respectively. Banque Saudi Fransi declined the most since Jan. 20 after the company said board member Thierry Simon resigned.

The kingdom would be willing to contribute ground troops as part of a wider campaign against Islamic State in Syria, Al-Arabiya television reported on Friday, citing Ahmed Asseri, the spokesman for the Saudi-led coalition fighting in Yemen.

“Sending ground troops to Syria is a concern given the cost to fund these military excursions," said Nayal Khan, the Riyadh-based head of institutional equities sales trading at Saudi Fransi Capital. “It signals an escalating geopolitical risk in the region. Any protracted military response is likely to deepen negative sentiment in the market and add pressure on the budget."

Emaar Bucks Trend

Dubai’s DFM General Index decreased 0.7 percent, the first decline in three days, as trading volumes slid to about two-thirds of the 12-month daily average. Emaar Properties PJSC was one of just five stocks to gain in the sheikhdom. The developer, whose skyscraper design was approved by Dubai’s ruler on Saturday, added 0.9 percent to the highest level since Jan. 5.

The new project is “a sign of commitment of Dubai in terms of expanding construction and continuing its real estate infrastructure,” said Tariq Qaqish, the head of asset management at Dubai-based Al Mal Capital PSC.

In neighboring Abu Dhabi, First Gulf Bank PJSC fell 1.7 percent to 11.50 dirhams. The United Arab Emirates’s third-biggest lender was one of the biggest contributors to the gauge’s 5.9 percent increase last week, the strongest advance since May 2014.

“Abu Dhabi is being dragged down by FGB after its recent run up to almost 12 dirhams a share," Arqaam’s Nsouli said.

Qatar’s QE Index lost 0.7 percent, led by Industries Qatar QSC, the country’s biggest petrochemicals company by revenue. It retreated 2.8 percent after reporting a 30 percent plunge in profit for 2015. The MSM30 Index in Oman advanced 1.1 percent and Kuwait’s SE Price Index gained 0.2 percent. Bahrain’s Bourse All Share Index was little changed.

Egypt Declines

Egypt’s EGX 30 Index fell 1.2 percent from a three-week high. Trading at 4.7 times estimated 12-month earnings, the gauge has become among the cheapest in the world as officials struggle to meet the demand for dollars in North Africa’s biggest economy without devaluing the local currency.

Talaat Moustafa Group was the biggest contributor to the decline with a 2 percent retreat. Commercial International Bank Egypt SAE, which makes up about a third of the index, slid 0.4 percent. The lender said it received an “expression of interest” from National Bank of Egypt’s investment-banking unit to present a competing bid for CI Capital.

Shares of Palm Hills Developments SAE, a Cairo-based luxury real estate developer, fell 0.9 percent even after the company said on Sunday its fourth-quarter profit surged 128 percent.

“The dollar shortage remains the biggest overhang on investor sentiment, outweighing any news that would otherwise have a positive impact on the market, such as strong earnings,” said Sherif Shebl, an equities trader at Cairo-based Pharos Holding.

Israel Slides

Israel’s TA-25 Index dropped 1.2 percent at the close in Tel Aviv, the biggest decline in more than two weeks, following a selloff in technology shares in the U.S. on Friday when the Nasdaq Internet Index plunged the most since 2011.

“The local market is reacting to the technology rout in the U.S. as the local share index has many technology and healthcare companies,” said Sagie Poznerson, the head of trading at Leader & Co. Investment House in Tel Aviv.

Nice Systems Ltd. was the biggest loser on the benchmark gauge, falling 3.6 percent to close at the lowest level since Jan. 18. Alon Blue Square Israel Ltd. retreated 10 percent, closing at its lowest price since Jan. 14.

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