Saudi stock market declines on oil, Dubai stalls near 15-month high

DUBAI / Reuters

Saudi Arabia’s stock market declined for a fourth straight day on on Wednesday after oil prices fell further, but other Gulf bourses largely moved sideways and Dubai held near a 15-month high.
The Saudi index pulled back 1.6 percent to 6,895 points, falling below technical support at the mid-December low of 7,002 points. Another straight close below support would confirm a break, triggering a double top formed by the December and January peaks and pointing down to around 6,770 points.
The market had rebounded more than 30 percent from its October lows so analysts said profit-taking pressure was inevitable.
“Beyond fourth-quarter earnings, which may show moderate improvement in earnings for some sectors like banks, investors will be focusing on economic reforms in 2017,” said Santhosh Balakrishnan, senior analyst at Riyad Capital.
In that environment, he added, stocks are only likely to rise if earnings come in much higher than analysts’ expectations.
Yanbu National Petrochemical Co jumped as much as 4 percent in the first hour of trade on Wednesday but closed flat after it reported a 53.4 percent rise in fourth-quarter net profit to 602.85 million riyals ($161 million), in line with analysts’ forecasts. Twelve of the 13 other listed petrochemical producers declined with heavyweight Saudi Basic Industries dropping 0.5 percent. All 12 listed banks were weak, with Al Rajhi falling 1.2 percent.
Meanwhile, Dubai’s main index pulled back 0.1 percent to 3,722 points. Union Properties dropped 1.7 percent and Dubai Financial Market, the only listed exchange in the Gulf, closed 1.4 percent lower.
But some shares in the insurance sector outperformed with Islamic Arab Insurance surged 6.5 percent in heavy trade to its highest close since August 2015. There is speculation that the finance and insurance industries may witness further tie-ups after the impending merger of National Bank of Abu Dhabi and First Gulf Bank.
Insurers were also volatile in neighbouring Abu Dhabi. Methaq Takaful Insurance jumped 5 percent but Al Khazna Insurance slumped 8.5 percent. The main index fell 0.1 percent.
Cairo’s blue chip index added 0.6 percent to 13,089 points, another record peak, but trading volume declined, shrinking by roughly half from last week’s high. Foreign funds, which were marginal sellers of shares on Tuesday, were net buyers by a narrow margin, bourse data showed.
Arabian Cement jumped a further 9.9 percent to 8.33 Egyptian pounds, taking its gains over the last two days to 16.9 percent after Beltone Financial placed a “buy” recommendation on the stock with a fair value of 12.60 pounds, citing higher cement prices and a healthy pricing environment.

Aabar set to invest in UniCredit’s share 

MILAN/ABU DHABI / Reuters

Abu Dhabi investor Aabar Investments is set to buy more shares in UniCredit in the Italian bank’s upcoming 13 billion-euro ($14 billion) share offer, Italy’s biggest ever cash call, three sources said on Wednesday.
UniCredit, the country’s largest bank by assets, will launch the share offer next month to boost its capital base as it embarks on a restructuring plan under new CEO Jean Pierre Mustier.
UniCredit has already found a group of banks ready to mop up any unsold shares, unlike rival Monte dei Paschi di Siena which last month had to be rescued by Italy’s government after failing to find buyers for its stock.
A successful capital raising would be an important sign of market confidence in Italy’s battered banking system, weighed down by bad loans and low profitability.
Mustier last month unveiled a plan to shift 17.7 billion euros in bad debts off UniCredit’s balance sheet, cut 14,000 jobs and close 944 branches by the end of 2019.
One of the three sources familiar with the matter said Aabar had confidence in UniCredit’s strategy and would buy new shares to keep its stake unchanged.