Gulf state’s regulator crackdown hits market liquidity
Kuwait's bourse fell to a six-week low on Sunday as
the suspension of several companies for failing to comply with listing
regulations prompted retail investors to sell. Most other regional share
markets also declined.
The Kuwaiti regulator suspended trading in three
companies, two of which saw their losses exceed 75 percent of capital. The move
came sooner than expected; in the past, the regulator has often waited until
the end of March before suspending companies which infringed rules at the end
of the past year, traders said.
The Capital Market Authority has launched a drive
to clean up the market, but its stricter approach may in the short term at
least hurt sentiment in a market that has been largely retail-driven.
"The higher risk of companies being suspended
by the regulator has raised the impetus for retail investors to sell,"
said Fouad Darwish, head of brokerage services at Global Investment House.
"People are not willing to buy at lower
levels, like they used to, because of a lack of liquidity."
The Kuwaiti stock index lost 0.7 percent, slumping
for a fifth consecutive session to its lowest finish since January 14. Kuwait is
the worst-performing market in the Gulf Cooperation Council this year.
In Egypt, the benchmark index shed 0.6 percent,
easing off Thursday's 65-month high in mild profit-taking. The market has
gained 19.1 percent in 2014, partly on expectations that army chief Field
Marshal Abdel Fattah Al Sisi will run for president.
Last week, after a surprise government reshuffle,
officials said Sisi would retain his position as defence minister, which he
might need to vacate to run for the presidency. The matter will be clarified
after a draft election law is finalised.
"There is euphoria in the market, which is 80
percent driven by retail investors, due to the upcoming elections," said
Islam Batrawy, Cairo-based head of regional equity sales at NBK Capital.
"That means more speculation and less fundamental trading."
In Saudi Arabia, the index shed 0.2 percent, easing
off Thursday's multi-year high. Shares in real estate developer Jabal Omar
bucked the trend and surged 8.9 percent to a record high in what analysts said
was retail-investor driven speculative activity; in the last few days, money
has poured into real estate-related shares.
In the United Arab Emirates, Abu Dhabi National
Energy Company (TAQA) tumbled 4.7 percent after announcing a consortium in
which it owns 51 percent would buy two Indian hydroelectric power plants in a
deal worth $1.6 billion. The deal expands TAQA's reach but exposes it to the
Indian economy, which has recently been unstable.
Dana Gas rose 1.2 percent after it announced plans
to start upgrading an Egyptian plant that would increase its output by 25
percent. Its decision may indicate confidence that it will recover more of the
hundreds of millions of dollars owed to it by Egypt.
Abu Dhabi's measure slipped 0.3 percent, down for a
second session since Wednesday's five-year high. Dubai's bourse lost 0.9
percent; it has essentially traded sideways since hitting a five-year high on
A company named Marka, describing itself as a
"retail and F&B company", said on Saturday that it planned to
conduct the first initial public offer on Dubai's main stock market for five
years in a AED275m ($75m) deal.
However, when or whether that plan might go ahead
remains unclear; contacted by Reuters, a spokeswoman for the company was unable
to give details of the plan or the company's business, or identify its owners.
In its statement, Marka said it was still
"under establishment"; Dubai Financial Market rules require companies
to have been incorporated for at least two years before they can list.
In Qatar Mesaieed Petrochemical, the market's first
new listing since 2010, fell by its daily limit of 10 percent for a second
straight day. The stock soared 450 percent in its debut on Wednesday on the
back of retail investor buying, valuing the stock at nearly three times levels
which analysts consider fair.