Saudi Stocks Follow Emerging Markets to Send Gulf Index Lower

  • Tadawul resumes trading after week-long religious holiday
  • Emerging-market shares dropped amid U.S. rates speculation

Saudi Arabian stocks declined the most in the Gulf as the kingdom’s equities traded for the first time in a week, tracking a selloff across developing nations as investors weigh the chances of a U.S. interest rate increase this year.

The Tadawul All Share Index dropped 1.9 percent on Sunday as it reopened after a week-long religious holiday. That dragged Bloomberg’s GCC 200 Index, a measure of the largest and most liquid companies in the six-nation Gulf Cooperation Council, down 0.8 percent to a more than two-month low.

Emerging-market stocks posted the steepest five-day drop in more than four months last week amid growing speculation the Federal Reserve may increase interest rates by year-end, diminishing appetite for riskier developing-nation assets. Meanwhile, oil retreated last week on speculation that Libya and Nigeria are preparing to boost exports, adding to growing skepticism that the Organization of Petroleum Exporting Countries and Russia will agree on measures to stabilize the market at a meeting in Algiers later this month.

“Saudi stocks are basically pricing in the long period without trade during which emerging markets dropped considerably,” said Saleem Khokhar, the Abu Dhabi-based head of fund management and equities at the asset-management group of National Bank of Abu Dhabi PJSC, the United Arab Emirates’ second-biggest bank. “Expectations for the talks in Algiers are not so high any more, which is not good for Saudi Arabia at all.”

Saudi Drag

The Tadawul closed at the lowest level since Sept. 1, as about 92 million shares changed hands, 65 percent below the gauge’s six-month daily average. Samba Financial Group and National Commercial Bank were the two biggest contributors to the index’s retreat on Sunday, declining 4.7 percent and 3.6 percent, respectively.

The Tadawul has been trading below its 50-, 100- and 200-day moving averages since July.

Oman’s MSM 30 Index closed less than 0.1 percent higher, while Abu Dhabi’s ADX General Index lost 0.3 percent. The Bahrain Bourse All Share Index gained 0.3 percent. Qatar’s QE Index added 0.4 percent, the first increase in five trading days.

Dubai’s DFM General Index was little changed. Shares of investment bank Shuaa Capital PSC advanced 9.3 percent to the highest level since Nov. 18 as traders speculated over the price at which Dubai Banking Group sold its stake to Abu Dhabi Financial Group LLC. Dubai Banking Group owns 48.36 percent of Shuaa, data compiled by Bloomberg show.

It’s a good time to start accumulating Gulf stocks, especially in the United Arab Emirates, as the shares tend to benefit from a more positive outlook for oil prices and better earnings forecasts, said Fahd Iqbal, Credit Suisse Group AG’s head of Middle East research. Still, equities in Saudi Arabia, Qatar and Bahrain may face more losses, Iqbal said.

Israeli Stocks

The TA-25 Index rose 0.9 percent, the most in six weeks, after declining last week. Shares in Bezeq The Israeli Telecommunication Corp. led the advance, with an increase of 2.2 percent, the biggest gain since June 30. The country’s largest fixed-line operator said it reached an accord with the Israel Tax Authority for a payment of 462 million shekels ($122 million).

The shekel strengthened 0.3 percent against the dollar in the past month through Friday, the best performer among 31 major currencies tracked by Bloomberg. The yield on the country’s 6.25 percent benchmark bonds due October 2026 fell two basis points to 1.78 percent after annual consumer prices dropped more than forecast, according to data released late on Thursday.

Egypt’s Low

Egypt’s EGX 30 Index fell 0.8 percent to the lowest level in almost seven weeks, dipping below its 50-day moving average for the first time since July.

Market turnover was depressed following Eid Al-Adha’s three-day holiday as the government moves to secure at least $5 billion in financing required to unlock a $12 billion International Monetary Fund loan. About 420 million Egyptian pounds ($47 million) of shares exchanged hands daily on average over the past month, 25 percent lower than since the start of the year.

Talaat Moustafa Group Holding, the country’s biggest publicly traded property developer, declined 3.1 percent, contributing most to the EGX 30’s loss. Juhayna Food Industries, the nation’s biggest producer of packaged milk, tumbled 3 percent to the lowest level in almost four years. The stock was dropped by FTSE Russell Indexes as of Friday.

— With assistance by Ahmed A Namatalla

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