Gulf barely moves, Egypt pulls back

Dubai : Gulf stock markets mostly moved sideways yesterday, drawing little strength from rising oil prices, while Egypt pulled back after closing at record highs for three straight days.

Brent oil futures rose to $61.70 per barrel, their highest since July 2015, while global equity markets continued climbing. The failure of Gulf bourses to rise on the back of these trends showed how gloomy investors have become about economic growth in the region.

Governments’ budget deficits will shrink substantially if oil stays above $60, but authorities are expected to continue austerity policies such as the introduction of a 5 per cent value-added tax as soon as January. These are expected to keep growth modest in 2018 and weigh on companies’ profit margins.

The Saudi stock index rose 0.2pc as top Saudi petrochemical producer Saudi Basic Industries edged up only 0.1pc.

Higher oil prices tend to be positive for profit margins at Saudi petrochemical firms but the industry faces the possibility of domestic electricity and fuel price hikes within months and higher gas feedstock prices as soon as in 2019.

National Petrochemical fell 2.1pc after reporting a marginal rise in quarterly net profit to 196.9 million riyals ($53m) from 191.6m riyals a year earlier.

Real estate firm Dar Al Arkan surged 3.1pc and City Cement edged up 0.1pc. It reported that quarterly profit fell sharply to 19.2m riyals from 32.9m riyals, but beat a forecast of 8.60m riyals by Aljazira Capital.

Alawaal Bank added 0.9pc after its profit jumped to 363m riyals from 262.8m riyals, largely because of a drop in loan impairment charges after several quarters of high charges. EFG Hermes had forecast 367m riyals and NCB Capital, 295m riyals.

Islamic insurer Solidarity rose 1.4pc after reporting a 39pc rise in quarterly profit before zakat, or Islamic tax, although gross written premiums fell sharply.

In Dubai, the index was almost flat as Emaar Properties rebounded 0.6pc. On Thursday, it is expected to announce the indicative price range for an initial public offer of shares in its local property development unit.

Qatar’s index edged up 0.1pc but Qatar Fuel Co (Woqod) fell 1.2pc to 91.91 riyals, testing and holding major technical support on its January 2016 low of 91.74 riyals.

The fuel products distributor, which last week reported a 17pc drop in nine-month net profit, has been in a downtrend since January.

The best-performing market in the Gulf was Oman, where the index climbed 0.8pc on the back of gains in two blue chips: National Bank of Oman, up 2.7pc after trading at multi-year lows, and Omantel, up 1.3pc.

Egypt’s index fell 0.5pc but Egypt Chemical Industries, which has been rising since it reported a more than doubling of quarterly net profit on Monday, gained a further 3.9pc.