Saudi Arabia's stock market rose for a third straight session on Thursday, rebounding from recent sell-offs and ahead of MSCI inclusion later this month. Abu Dhabi was pressured by its top-lender. On Monday, MSCI said that it would include MSCI Saudi Arabia in its emerging-markets index, effective May 28, a move that could draw billions of dollars into the market.
MSCI said 30 Saudi Arabian securities would be added, representing an aggregate weight of 1.42% in the MSCI Emerging Markets Index. The Saudi index was up 1.7% with Al Rajhi Bank adding 2.5%, while Saudi Basic Industries was up 1.3%. Saudi Telecom jumped 5.1% after HSBC raised its target price.
The three stocks are the largest additions to the MSCI Emerging Markets Index measured by full company market capitalization. Saudi British Bank and Alawwal Bank added 1.6% and 2.3% respectively after their shareholders approved a planned merger. The Abu Dhabi index slid for the fourth straight session, down 1.2%, with Emirates Telecommunications Group shedding 1.7%.
First Abu Dhabi Bank, the United Arab Emirates' largest lender, shed 2.1%. The lender fell in recent sessions after MSCI decided to maintain its foreign inclusion factor at 25%, despite recent foreign ownership limit increase to 40% from 25%. The bank said on Thursday that it was seeking clarification from MSCI on limiting its free float at 25% and added that MSCI's decision was subjective and didn't match publicly available disclosures.
Egypt's blue-chip index, lost 1% with Commercial International Bank falling 1% and Juhayna Food Industries slumping 9.7%. In Dubai, the index dipped 0.3%, weighed down by its real estate stocks. Contractor Arabtec Holding plunged 7%. On Wednesday, the firm reported a 50% drop in its first-quarter profit. Union Properties shed 2.8% after reporting a plunge in its first-quarter profit.
Dubai property prices have fallen since a mid-2014 peak, hurt by weaker oil prices and muted sales.
Qatar's index edged up 0.1% with Mesaieed Petrochemical gaining 2.9%. The stock has been rising since it was added to the MSCI index earlier this week. But a few banks dropped, with Qatar International Islamic Bank closing 1.7% lower.
Qatari banks face growing pressure from high exposure to the country's sluggish real estate market, hit by oversupply tied to preparations for its 2022 World Cup, ratings agency Fitch said.
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