Gulf equity markets were mostly soft on Monday after oil prices pulled back again, while Egypt rose on a fresh sign of foreign investor interest as foreign telecommunications firm Orange raised its stake in a local operator. Brent crude oil dropped below $59 a barrel by 1230 GMT on worries about oversupply in North America and a strong dollar.
Oil's sharp rebound earlier this year and fourth-quarter earnings reports were the main drivers behind equity market rallies across the Gulf. With both factors largely gone, volumes dropped and markets started trading sideways this week. Saudi Arabia's main index fell 0.7 percent as all major sectors retreated, including petrochemicals, banks and telecommunications. Dominant mobile phone operators Saudi Telecom and Mobily dropped 4.8 and 3.3 percent respectively.
The kingdom's telecommunications regulator slashed call termination fees by 40 percent, a move which is seen as mostly benefiting Zain Saudi, the smallest of the country's three mobile network operators, whose shares surged 6.9 percent. Termination fees are those charged when a call originating on one network terminates on another network, with the caller network charged by the operator of the network on which the call is received. High termination fees tend to benefit the larger network operators, which have a bigger market share and fewer calls going "off-net" to other providers.
The regulator also cut similar fees for landline networks by 30 percent and Atheeb Telecom, which operates in that segment, rose 1.7 percent. Dubai's stock index slipped 0.2 percent as most stocks lacked clear direction. Bahrain-based Gulf Finance House surged 7.8 percent after posting a profit of $1.4 million in the fourth quarter, compared with a loss of $18.7 million a year earlier. Another small company, Dubai Refreshments, rose 9.8 percent after proposing a dividend of 0.65 dirham per share for 2014, up from 0.60 dirham it paid for 2013.
Abu Dhabi's index edged down 0.4 percent as Abu Dhabi National Energy Company and Dana Gas, whose profits are sensitive to oil prices, tumbled 6.4 and 4.3 percent respectively. Qatar's bourse edged up 0.2 percent with most stocks in the black. However, Qatar Insurance Co and Qatar Islamic Bank fell 0.9 and 2.0 percent as both stocks no longer carried 2014 dividends.
Egypt's bourse rose 1.1 percent as Orascom Telecom Media and Technology (OTMT) surged 4.1 percent, while telecommunications operator Mobinil, which is not part of the benchmark, jumped its daily 10 percent limit. France's Orange and OTMT said on Monday that OTMT would sell its 5 percent stake in Mobinil to Orange for about 209.6 million euros. While relatively small, the deal is significant as it, along with other recent moves such as the bid by Europe's biggest dairy group, Lactalis, for Arab Dairy, demonstrates growing foreign interest in Egypt following the return of political stability and economic reform pledges.