Egypt falls on clashes, oil weighs on Gulf markets

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CAIRO/DUBAI: Sectarian violence in Egypt weighed on its index on Sunday while most Gulf Arab markets fell in response to a sharp drop in oil prices.

Saudi Arabia, the world’s largest crude exporter, bucked the trend as bargain hunters stepped in and helped the index recoup Saturday’s oil-driven losses.

Egypt’s benchmark share index fell to its lowest since March 24 after Saturday’s clashes between Muslims and Christians in a Cairo suburb lead to renewed concern that social tensions will hit tourism and investment, traders said.

"Yesterday’s clashes are definitely the cause of this decline," said Pharos trader Shamel Fahmy. "There is not just the political risk. Events like these might decelerate the pick-up we want in foreign direct investment and tourism."

The index closed 1.2 percent lower, with private equity firm Citadel Capital falling the most. Citadel dropped 5.5 percent and investment bank EFG-Hermes closed down 5.4 percent.

EFG was the most active stock with more than LE 38.5 million ($6.76 million) worth of its shares traded.

Brent crude fell $1.67 to settle at $109.13 on Friday, capping a frenzied trading week that sliced prices by more than $16 on demand worries and a move by investors to slash commodities exposures.

Dubai’s benchmark slumped to a four-week closing low, down 1 percent as all sectors retreated.

Arabtec and Emaar Properties fell 1.4 and 1.6 percent respectively, between them accounting for a third of all shares traded.

Most UAE bank stocks slid, despite an upbeat outlook.

"There is a good momentum (in the banking sector) because of first-quarter results and we expect it to continue," said Sebastien Henin, portfolio manager at TNI National Investment.

Abu Dhabi dropped 0.4 percent.

Shares in First Gulf Bank, Abu Dhabi’s second largest bank by market value, have lagged and offer potential upside, Henin added. FGB shares shed 1.4 percent.

Attractive valuations lifted the Saudi index by 0.7 percent, easing away from Saturday’s two-week low when investors sold positions on the sharp oil price decline.

Seven of the 10 largest stocks ended higher, with Saudi Basic Industries Corp the most heavily traded. It rose 0.2 percent.

Analysts forecast continued volatility in coming sessions.

"Some investors are picking up stocks on valuation," said a Riyadh-based trader speaking on condition of anonymity. "Until crude settles, you will see volatility. Whenever there is uncertainty, you have volatility," he said.

Al-Rajhi Bank, the largest Saudi bank by market value, ended up 0.7 percent and Saudi Arabian Fertilizers Co gained 1.3 percent.

Elsewhere, all stocks declined in Oman and the benchmark fell 0.8 percent, closing at a month low.

Market heavyweight Bank Muscat fell 1.6 percent and Galfar Engineering slipped 3.8 percent after reporting first-quarter net profit of 1.38 million rials, according to a statement on the bourse.

Bucking the trend, Qatar’s index edged up 0.07 percent, ending a five-session losing streak. Qatar Telecom gained 2.4 percent.

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