Saudi Arabia's stock market fell on Sunday, in line with most Gulf markets, after the US Pentagon approved the deployment of a warship and Patriot missiles to the Middle East. Sunday's decline was the sharpest one day drop since Nov. 18, 2018. The Tadawul All-Share Index fell two percent to close at 8,675 points, its lowest level since the end of March. The benchmark is down almost 7 percent this month.
"The increased military tension between the US and Iran are pressuring markets down," said Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital in Abu Dhabi.
The US military said last week that a number of B-52 bombers would be part of additional forces being sent to the Middle East following indications of possible preparations for an attack by Iran. Talal Samhouri, head of asset management at Amwal in Doha said the Saudi drop was mostly due to bearish sentiment surrounding Iran and also China's trade dispute with the United States.
"Negative sentiment is clouding the bullish expectations for foreign fund inflows coming from the MSCI inclusion," he said, referring to the incorporation of Saudi stocks into the index compiler's emerging index later this month. Dubai's index was down 1.6 percent, weighed by its largest lender Emirates NBD which lost 3.5 percent. Investment bank Shuaa Capital was down 8 percent. DXB Entertainments, the theme park operator for Legoland and Motiongate, was down 6 percent.
"The US navy is sending their ships towards the region which is a concern for any investors who are looking to trade in a low liquidity environment," Tariq Qaqish, managing director, asset management division, Mena Corp Financial Services said. For every stock that rose, eight declined on the Dubai Financial Market exchange. "Although the large caps are trying to hold the indices, the small companies are being hammered," Yasin said.
And in Kuwait, the Premier market index was down 2.2 percent. The Abu Dhabi index rebounded with a rise of 0.9 percent, boosted by banking stocks. First Abu Dhabi Bank was up 1.9 percent. However, Waha Capital was down 8.4 percent after the investment firm reported a net loss of 57.8 million dirhams due to a revaluation of its investment in global aviation leasing firm Aercap. Dana Gas, a Sharjah-based gas explorer and producer, was down 5.3 percent.
Qatar's index was down one percent with heavyweight stocks Qatar National Bank and Qatar Gas Transport Company falling 0.8 percent and 2.7 percent, respectively. Investors saw value in Egypt's market after a strong sell-off last week. Trading was very thin, with almost $12 million of shares changing hands. Private equity firm Citadel Capital led the gains, with a rise of 6.2 percent. Egypt's blue-chip EGX30 index rose 0.4 percent to 14,122 points.
"Egypt was down five percent last week in line with other global emerging markets," said Mohamad Al Hajj, an equities strategist at EFG-Hermes in Dubai. "Today we saw a rebound in the market as some stocks are trading at very attractive levels."
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