Gulf end mixed as Saudi falls back

Dubai : Saudi Arabia’s stock index fell back yesterday as many blue chips were seen as fully valued or expensive after the market hit a more than two-year high the previous day. Other Gulf markets were mixed, with property stocks dragging Dubai lower.

The Saudi index ended 0.2 per cent lower, remaining near levels last seen in August 2015. The index is up 15pc this year because of inflows of foreign funds and strong corporate earnings.

Saudi Basic Industries (SABIC) and Al Rajhi Bank both dropped 0.3pc.

“In terms of broad valuation metrics at a 16 times price to earnings multiple, it is definitely not cheap, given earnings growth is not yet visible,” Vrajesh Bhandari, portfolio manager at Al Mal Capital in Dubai, said of Saudi Arabia.

“For instance, SABIC at 19 times is a good 15pc more expensive than its historical average ratios. In fact, I feel most large caps are either full or have built a 5-10pc froth over their fair market value.”

Dallah Healthcare dropped 3.6pc to its lowest close this year after its first-quarter net profit fell 32pc.

The company said it was hit by higher start-up expenses from a new hospital project, the imposition of value-added tax, and provisions for credit losses as it adopted International Financial Reporting Standards.

Arabian Cement tumbled 8.3pc in its heaviest trade since April 2016 after reporting a surprise first-quarter net loss of 6.1 million riyals ($1.6 million). Three analysts surveyed by Reuters had on average forecast a profit of 69 million riyals.

Dubai’s index fell 0.9pc to a two-year low, hurt by selling in property stocks. Emaar Properties closed 1.6pc lower after opening higher; the stock is down 16pc so far this year.

DAMAC Properties ended the day 0.4pc lower but erased some of its losses in early trade, when it was down 2.9pc.

The stock suffered on Monday after it lowered its annual dividend, which was not a shock for institutional investors who track the company’s cash flow, but caught retail investors by surprise, analysts
said.

Qatar’s index fell 0.7pc on profit-taking after a spate of strong earnings helped recent gains. Qatar National Bank dropped 1.6pc and Qatar Electricity & Water fell 2.5pc The index is up nearly 7pc so far this year.

Kuwaiti education company HumanSoft dropped 2.8pc after a shareholder meeting declined to approve a board proposal to distribute a stock dividend of 70 shares for every 100 shares, though it did approve a motion to raise the annual cash dividend to 175 fils per share from an originally proposed 160 fils.