Most Gulf stock markets extended losses on Wednesday as oil prices fell further, but positive news from banks supported Qatar and Oman. Brent crude slipped below $56 per barrel Tuesday on expectations that oversupply in world markets would persist and after an industry report saying US crude inventories rose from a record high.
Saudi Arabia's main equities index fell 1.8 percent on Wednesday as petrochemical giant Saudi Basic Industries lost 1.9 percent and National Commercial Bank , the largest listed lender, tumbled 4.4 percent. The kingdom's market has outperformed the region this year and was up 11.6 percent as of Tuesday's close; all other Gulf Co-operation Council markets have gained less than 5 percent.
Saudi Arabia did so well partly because of oil's rebound in the last few weeks, which benefits petrochemicals, a major sector on the local stock market. With oil now looking weak again, investors may be reviewing their positions, or just taking profits. Company for Co-operative Insurance (Tawuniya) was another major drag, tumbling its daily 10 percent limit. The firm announced a cash dividend of 1.45 riyals per share on Wednesday, much lower than its 2012 payout of 3.5 riyals, even though its 2014 profit was much higher than that for 2012. The firm posted a loss and paid no dividend for 2013.
Dubai's index edged down 0.6 percent as Emaar Properties fell 1.5 percent and Arabtec lost 1.9 percent. Property firm DAMAC, which had tumbled its 10 percent limit for two sessions in a row after offering no cash dividend for 2014, stabilised and edged up 0.4 percent. Shuaa Capital rose 1.2 percent after its subsidiary obtained a licence to provide sharia-compliant leasing products in the Saudi Arabian market.
Abu Dhabi inched down 0.1 percent as most large banks declined. National Bank of Abu Dhabi and First Gulf Bank slipped 0.7 and 0.3 percent respectively. Qatar's index edged up 0.2 percent after NBK Capital said in a report on Tuesday it considered Qatari banks more immune to the lower oil price environment than their peers in Saudi Arabia and the United Arab Emirates.
"Another factor to keep in mind for Qatari stocks in 2015 is the potential increase in the foreign ownership limits (FOLs) to 49 percent of total outstanding shares from the current 25 percent, leading to fresh investment inflows," it said. "Naturally, Qatar National Bank, given its size, would be the major beneficiary in the event of an increase in FOLs." Qatar National Bank added 1.7 percent and was the main support for the benchmark. Heavyweight property developer Ezdan Holding, which will announce its earnings and dividend later this month, also gained 1.7 percent.
Oman's index rose 0.4 percent after Bank Nizwa approached United Finance Co with a merger proposal. Nizwa surged its daily 10 percent limit and United Finance jumped 4.1 percent. United Finance's board will consider the proposal at its next meeting, the company said without giving any details. Egypt's market fell 1.3 percent as Commercial International Bank slid 1.8 percent despite posting strong fourth-quarter earnings. Most other stocks were also in the red.
"We had a lot of incidents here and there on the security side, so maybe this is a reflection of that. Security is quite a sensitive issue now," a Cairo-based analyst said. In the latest incident on Tuesday, suspected Islamist militants set off five bombs in Egypt's second city Alexandria, wounding 10 people.
Also, the Daily News Egypt newspaper reported on Tuesday, citing the government, that Egypt's non-petroleum exports had fallen 20 percent year-on-year, but the news was "not big enough for the market to fall that much", the analyst said. "Overall, fundamentally the companies are doing quite well and things are going in the right direction," he said.