Most major Middle East stock markets rose on Wednesday on positive second-quarter earnings and news that the United Arab Emirates would cut domestic diesel prices. Saudi Arabia's main index added 0.5 percent, supported by National Petrochemical Co (Petrochem), which surprised analysts with strong quarterly earnings. Petrochem surged 7.4 percent after the company posted a 55 percent increase in net profit that it attributed, among other factors, to cheaper feedstock.
It reported just before the extended Eid al-Fitr break which began last week Petrochem's parent company, Saudi Industrial Investment Group, posted a 61 percent increase in quarterly profit on Wednesday and its shares surged 4.2 percent. Saudi Ground Services jumped 3.1 percent after reporting a 15 percent increase in second-quarter profit. Dubai's index rose 0.5 percent after the UAE's Energy Ministry said it would switch from fixed gasoline and diesel prices on the domestic market to ones based on global prices and revised monthly. It provided no concrete figures.
In the long term, the reform could cause substantial rises in gasoline and diesel prices but with Brent oil currently at about $56 a barrel, the initial impact appears likely to be small. A ministry official told Reuters gasoline prices might rise slightly from next month but diesel was expected to fall, which would help the economy by restraining inflation and reducing transport costs.
Changes in fuel prices will directly affect the bottom lines of companies that rely heavily on trucks and cars, such as courier Aramex, whose shares surged 4.7 percent on Wednesday. Abu Dhabi's bourse climbed 1.0 percent to an eight-month high of 4,902 points and Abu Dhabi Commercial Bank rose 4.0 percent after posting a 21 percent rise in second-quarter net profit, which slightly beat analysts' forecasts, aided by lower loan impairments.
The lender made a net profit attributable to shareholders of 1.28 billion dirhams ($349 million) in the quarter, while analysts polled by Reuters had forecast an average of 1.18 billion dirhams. Two other large Abu Dhabi-listed lenders, First Gulf Bank and National Bank of Abu Dhabi, rose 1.6 and 0.9 percent respectively. The two have yet to publish their own quarterly results. Qatar's bourse underperformed the region and fell 0.8 percent with no major earnings announcements expected this or next week.
Egypt's index climbed 0.5 percent, paring early losses as most stocks closed higher. Prime Holding surged 7.6 percent after announcing a stock dividend. Electro Cables Egypt, which last week sold its stake in Egypt Cables Co for nearly three times its book value, surged its daily 10 percent limit.