Gulf stock markets were mixed on Tuesday, guided by economic data and dividends, while Egypt edged up on the back of property stocks after reports about plans to build a new $80 billion capital city from scratch. Saudi Arabia's main stock index rose 1.1 percent after strong purchasing managers index (PMI) data. Growth in the kingdom's non-oil private sector accelerated to a four-month high in February as lavish handouts to citizens by the new king buoyed the economy despite the plunge in oil prices, the SABB HSBC survey showed.
"The latest whole economy PMIs from the MENA region provide further evidence that the fall in oil prices hasn't caused activity in the Gulf economies to collapse, as some had feared," Jason Tuvey, Middle East economist at London-based Capital Economics, said in a note. Investors' attention shifted back from the property sector to banks and petrochemicals which had traded nearly flat in the previous few sessions. Petrochemicals giant Saudi Basic Industries rose 1.4 percent as Brent oil recovered some of Monday's losses, jumping 2 percent.
Alinma Bank, which will pay a dividend of 0.5 riyal per share next week, was the most traded stock and jumped 2.2 percent. Other Gulf markets were less positive. Qatar's index fell 1.3 percent because of Islamic lender Masraf Al Rayan, which dropped 2.7 percent as its shares no longer carried the 2014 dividend of 1.75 riyals.
Petrochemicals-to-metals conglomerate Industries Qatar, which went ex-dividend a day earlier, was down a further 2.7 percent. In the United Arab Emirates, business activity growth in the non-oil private sector slowed to a five-month low in February but remained strong and above the average for 2014, according to the HSBC PMI survey. Abu Dhabi's market edged up 0.2 percent on the back of First Gulf Bank, which rose 1.4 percent. The lender will pay a dividend of 1.00 dirham per share on Thursday. Union National Bank, which will make its annual payout of 0.25 dirham next week, jumped 2.8 percent.
Dubai's index fell 0.8 percent as most stocks declined. Builder Arabtec, which has not yet commented on media reports saying its $40 billion Egyptian project has stalled again, fell 0.7 percent. But real estate developer Emaar Properties bucked the trend and inched up 0.1 percent ahead of Wednesday's board meeting that will discuss dividend payments for 2014.
Also, Egyptian newspapers reported on Tuesday that the Cairo government was about to approve an $80 billion project to build a new capital city. They quoted investment minister Ashraf Salman in an interview with the United Arab Emirates' The National newspaper, and mentioned Emaar as one of the potential project participants. The news lifted most property stocks in Egypt, helping the main index climb 0.2 percent. Palm Hills Development rose 1.5 percent and Heliopolis Housing added 1.1 percent.
Investment firm Pioneers Holding jumped 2.6 percent after it won the race to buy Egypt's Arab Dairy for 255 million Egyptian pounds ($33.4 million), beating a rival offer from a subsidiary of European giant Lactalis. The company has also completed the acquisition of a 60 percent stake in real estate firm Rooya Holding, announced last year, and approved a capital increase of 3 billion Egyptian pounds.
Egypt's PMI data pointed to the sharpest contraction since September 2013 as input costs rose because of a weaker pound. But Tuvey from Capital Economics said the effect was likely to be short-term. "We doubt that this marks the start of a sharp downturn in Egypt's economy. After all, over a longer horizon, a depreciation of the pound should be seen as a positive development as it will boost the competitiveness of exports and attract much-needed foreign investment back to the country."