Saudi stocks follow emerging markets to send Gulf index lower

Bloomberg

Saudi Arabian stocks declined the most in the Gulf as the kingdom’s equities traded for the first time in a week, tracking a selloff across developing nations as investors weigh the chances of a U.S. interest rate increase this year.
The Tadawul All Share Index dropped 1.9 percent on Sunday as it reopened after a week-long religious holiday. That dragged Bloomberg’s GCC 200 Index, a measure of the largest and most liquid companies in the six-nation Gulf Cooperation Council, down 0.8 percent to a more than two-month low.
Emerging-market stocks posted the steepest five-day drop in more than four months last week amid growing speculation the Federal Reserve may increase interest rates by year-end, diminishing appetite for riskier developing-nation assets. Meanwhile, oil retreated last week on speculation that Libya and Nigeria are preparing to boost exports, adding to growing skepticism that the Organization of Petroleum Exporting Countries and Russia will agree on measures to stabilize the market at a meeting in Algiers later this month.
“Saudi stocks are basically pricing in the long period without trade during which emerging markets dropped considerably,” said Saleem Khokhar, the Abu Dhabi-based head of fund management and equities at the asset-management group of National Bank of Abu Dhabi PJSC, the United Arab Emirates’ second-biggest bank. “Expectations for the talks in Algiers are not so high any more, which is not good for Saudi Arabia at all.”

Saudi Drag
The Tadawul closed at the lowest level since Sept. 1, as about 92 million shares changed hands, 65 percent below the gauge’s six-month daily average. Samba Financial Group and National Commercial Bank were the two biggest contributors to the index’s retreat on Sunday, declining 4.7 percent and 3.6 percent, respectively. The Tadawul has been trading below its 50-, 100- and 200-day moving averages since July.
Oman’s MSM 30 Index closed less than 0.1 percent higher, while Abu Dhabi’s ADX General Index lost 0.3 percent. The Bahrain Bourse All Share Index gained 0.3 percent. Qatar’s QE Index added 0.4 percent, the first increase in five trading days.
Dubai’s DFM General Index was little changed. Shares of investment bank Shuaa Capital PSC advanced 9.3 percent to the highest level since Nov. 18 as traders speculated over the price at which Dubai Banking Group sold its stake to Abu Dhabi Financial Group LLC. Dubai Banking Group owns 48.36 percent of Shuaa, data compiled by Bloomberg show.
It’s a good time to start accumulating Gulf stocks, especially in the United Arab Emirates, as the shares tend to benefit from a more positive outlook for oil prices and better earnings forecasts, said Fahd Iqbal, Credit Suisse Group AG’s head of Middle East research. Still, equities in Saudi Arabia, Qatar and Bahrain may face more losses, Iqbal said.