Middle East markets mixed as Saudi, Egypt bourses make late dip

Middle East markets were mixed on Tuesday as the later-closing Saudi Arabia and Egypt bourses gave back initial gains following a renewed drop in oil prices. Brent crude, which had risen more than 50 percent from 12-year lows in January, was down 0.8 percent at $41.23 a barrel at 1240 GMT. The prolonged oil slump sparked panic selling on Gulf markets in January, but confidence has steadily returned as traders' worst fears of a repeat of the 2008-09 bourse collapse proved unfounded.
Having hit multi-year lows in mid-January, Saudi Arabia's benchmark is up 18.6 percent, Dubai has gained 27.9 percent and Qatar 23.2 percent although this momentum is now waning. "Following a big shake-up across equity markets globally, we have entered a period of low volatility," said Sebastien Henin, head of asset management at The National Investor in Abu Dhabi.
"Companies in the region released decent Q4 results, with some positive surprises in terms of dividends. This combination of factors has helped support Gulf markets." Saudi's index was up as much as 0.5 percent in early trade as petrochemical and bank stocks led gains, but it then tracked a drop in oil prices - sparked by deadly explosions in Brussels on Tuesday - to end 0.07 percent lower at 6,482 points. "Crude's rebound has been very encouraging for sentiment and the fiscal position of Saudi Arabia," said Asim Bukhtiar, Head of Research at Saudi Fransi Capital.
A new government transformation plan for the kingdom, which is expected to be announced by the end of April, is creating investor uncertainty, however, said Bukhtiar. "There are expectations that energy and utility prices will increase and so will taxes, levies and fees," said Bukhtiar. Earlier this year, many listed companies issued statements estimating the likely impact of reductions to energy subsidies, adding to investor gloom over likely first-quarter profits following the slump in oil prices.
"Most of these were rough estimates and some companies are now saying the impact might not be as bad as expected," said Bukhtiar. "The next target is 7,000 and as we head into the next quarter that could be achievable." In Egypt, Arabian Food Industries (Domty) surged 9.2 percent on its bourse debut. It had sold 12.25 million shares in a public offering this month that was hugely over-subscribed. The index ended 0.9 percent lower - having been up as much as 1.1 percent intraday - trimming its gains to 13.2 percent since March 14's currency devaluation.