Middle East stock markets edged down on Thursday after Yemen's government called for military intervention on the ground, a move that could further escalate the conflict in which Gulf nations and Egypt are involved. Yemen urged the international community "to quickly intervene by land forces to save" the country, specifically in the cities of Aden and Taiz, according to a letter sent to the United Nations Security Council on Wednesday.
The letter from Yemen's UN Ambassador Khaled Alyemany, seen by Reuters, could provide legal cover for ground intervention. Saudi Arabia's index fell 0.6 percent to 9,718 points as most stocks declined, including bluechips Saudi Telecom and Saudi Basic Industries, down 2.0 and 0.5 percent respectively. But the index closed off its intra-day low of 9,663 points as worries about Yemen also lifted oil prices.
Riyadh leads the coalition of Arab states that has since March carried out air strikes against Yemen's Houthi rebels. Stock markets reacted negatively to the initial news of military intervention and any further escalation could temporarily dampen investor sentiment again, to a moderate degree. Other Gulf markets were also soft. Dubai's stock index edged down 0.3 percent with most stocks in the red. But district cooling firm Tabreed surged its daily 15 percent limit after announcing plans to buy back some of its convertible bonds.
The company is looking to buy back 854 million of the bonds at a cost of 1 billion dirhams ($272 million), replacing them with a new, cheaper loan. The move would prevent the dilution of existing shareholders' stakes from eventual conversion of the bonds into equity. National Industries Group also soared 15 percent after calling a shareholder meeting to approve its first dividend payout since 2008. Markets in Abu Dhabi and Qatar edged down 0.2 and 0.4 percent in broad pull-backs; trading volumes fell both in the United Arab Emirates and Qatar.
Egypt's market gave up intra-day gains and slipped 0.2 percent as foreign investors, who had mostly been net buyers in the last few weeks, turned net sellers. A global sell-off in sovereign bonds spooked equities investors this week and MSCI's emerging market index was down 1.5 percent on Thursday. Ezz Steel was the biggest loser in Cairo, tumbling 4.3 percent to 11.93 pounds. Egypt's Pharos Securities this week slashed its fair value estimate of the stock to 10.7 pounds from 16.6 pounds, citing an uncertain outlook for gas supplies, declining steel prices and what it said was a likely cancellation of the company's expansion plans.