Saudi stock market pulls back from three-month high as Doha deal in doubt

Dubai down as investors sell mid- to large-caps
Uncertainty at talks among oil producers in Doha dampened Gulf stock markets on Sunday, with Saudi Arabia pulling back after a 4 percent jump last week. (FAYEZ NURELDINE/AFP/Getty Images)
By Reuters
Sun 17 Apr 2016 07:46 PM

Uncertainty at talks among oil producers in Doha dampened Gulf stock markets on Sunday, with Saudi Arabia pulling back after a 4 percent jump last week.

Early on Sunday it appeared that producers were close to agreeing an oil output freeze, but negotiations were later delayed into the afternoon as a new proposal called for all OPEC members to agree even though Iran has said it will not take part.

"Investors interpreted the delay to possibly mean a lack of a solid deal," said a Jeddah-based trader, adding that investors would prefer to wait until an agreement was reached.

Saudi Arabia's stock index shed 1.5 percent to 6,412 points, falling back from a three-month high hit on Thursday.

But Saudi banks' first-quarter results continued to surprise on the upside, with the largest lender by market value, Al Rajhi Bank, posting a first-quarter net profit of 2.02 billion riyals ($538.7 million), a 32.8 percent jump, as it cut wage costs and fee income increased.

Six analysts surveyed by Reuters had on average forecast quarterly profit of 1.84 billion riyals. Shares in the Islamic lender jumped 1.3 percent. Al Rajhi is the best performer among its peers year-to-date, up 10.6 percent while the banking sub-index is down 5.5 percent in 2016.

Saudi Kayan Petrochemical jumped 2.9 percent to 5.35 riyals after the company made a net loss of 216.3 million riyals in the three months to March 31; the average estimate of three analysts polled by Reuters was for a quarterly loss of 373.8 million riyals.

Analysts at NCB Capital, who had estimated Kayan would make a net loss of 391 million riyals, said in note on Sunday that the improvement was due to better gross margins, although they remained "neutral" on the stock with a target price of 5.20 riyals.

"Operational issues, a weak outlook and high debt levels are key risks for the stock," the note added.

Saudi Basic Industries, the majority shareholder in Kayan, is scheduled to report earnings in the next few days and fell 1.0 percent.

Food manufacturer and retailer Halwani Brothers slumped 6.5 percent after posting a 46.3 percent drop in first-quarter profit to 13.9 million riyals.

The company said the sharp decline was mainly due to the devaluation of the Egyptian pound. Halwani derived close to half its total revenue from Egypt in 2015, according to Thomson Reuters data.

Another Saudi food manufacturer with a large presence in Egypt, Savola, which has yet to publish its quarterly report, dropped 4.3 percent.

Dubai's index fell 0.7 percent as local investors cashed out of mid- to large-cap stocks. Emaar Properties and Dubai Financial Market fell 1.5 and 1.9 percent respectively.

But Shuaa Capital, which has been volatile over the past month, jumped 9.7 percent in heavy trade. There have been rumours that a major shareholder might be interested in buying out the financial firm.

Abu Dhabi-listed Dana Gas jumped 3.6 percent and was the most heavily traded share on that bourse. The Abu Dhabi index rose 0.5 percent.

In Qatar, the main index slipped 0.5 percent, with vessels operator Qatar Gas Transport down 0.3 percent.

Cairo's main index gained 0.7 percent as local investors bought shares after being net sellers last week, bourse data showed.

Orascom Telecom Media, the most heavily traded stock, recovered Thursday's 2.6 percent loss and added 2.8 percent.

Investment bank EFG Hermes added 3.0 percent after the company said it had acquired Egyptian Gulf Bank's 17.3 percent stake in Tanmeyah Micro Finance for 77.9 million Egyptian pounds ($8.77 million), taking its total ownership to 94 percent.

Juhayna Food Industries rose 1.4 percent after reporting first-quarter net profit of 80.4 million Egyptian pounds versus 65.2 million in the same period last year.

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Last Updated: Thu 26 Jan 2017 01:27 PM GST

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