Insurers hurt Saudi Arabia, UAE climb

Dubai : Insurance stocks helped to drag down Saudi Arabia’s market yesterday because of fears of a shakeout in the industry, while bourses in the United Arab Emirates and Qatar rose, helped by a bullish global trend in equities.

The main Saudi index sank 2.2 per cent to 6,890 points, closing significantly below the 200-day moving average, now at 7,042 points, for the first time since last November.

Shares in 32 of Saudi Arabia’s 33 listed insurance firms tumbled, with several losing more than 7pc. Only Bupa Arabia, a favourite of foreign investors, escaped a drop, closing flat.

Most insurers had slid on Tuesday after regulators ordered nine insurance brokers to stop business, citing regulatory violations. The central bank has taken a tough stance on compliance in the sector during recent months, suspending business at several firms, and investors are bracing for a possible shakeout in the sector.

The central bank is preparing to introduce a new supervisory framework in coming months that will force insurers to boost capital as well as improve internal risk controls, two people with direct knowledge of the matter told Reuters.

Central bank officials “said half of the companies that are here today will not be here”, one of the sources said. “They want stronger companies in the market.”

Bank Aljazira, which had plunged its 10pc daily limit on Tuesday after announcing it would resubmit a request to the regulator for approval of a 3 billion riyal ($800 million) rights issue, fell a further 6.4pc in heavy trade.

Banque Saudi Fransi dropped 2.7pc in its sixth straight day of falls. The bank said it had appointed an independent team to examine violations related to its employee incentive programme in past years, though it expects no material change in its financial statements.

Among other big losers, petrochemical blue chip Saudi Basic Industries lost 2.8pc. Telecommunications firm Mobily fell 2.6pc to an 11-year low.

In Dubai, the index rose 0.8pc on the back of a 1.4pc rise by Emaar Properties, while a 2.5pc rise by Dana Gas helped the Abu Dhabi index climb 1.0pc.

Qatar rose 1.0pc, gaining for a fourth straight day in a technical rebound from five-year lows. Bourse data showed non-Gulf foreign investors were net buyers by a ratio of about 4:3 and accounted for 43pc of all buying. Egypt’s index edged down 0.1pc. Ezz Steel dropped 3.8pc to 17.27 Egyptian pounds after a 2.4pc fall on Tuesday, when the company reported a quarterly consolidated net loss attributable to shareholders of 550.1 million pounds ($31.3 million) versus a loss of 239.6 million pounds a year earlier.