Gulf stock markets were mixed on Wednesday as oil prices failed to recover the previous day's losses, while Egypt's bourse pulled back following a broad rally prompted by a decision to delay the unpopular capital gains tax. Brent oil fell over 3 percent on Tuesday to a one-month low of $63.95 per barrel on a US dollar rally and concern about a building glut, which Goldman Sachs said would lead to a return to 2015 lows. It rose 1.5 percent on Wednesday after strong Japanese economic growth surprised markets, but remained below $65.
The main Saudi stock index fell 0.8 percent to 9,731 points as most bluechips declined and leading petrochemicals firm Saudi Basic Industries (SABIC) fell 1.9 percent to 105.00 riyals. Brokerage Renaissance Capital on Wednesday downgraded SABIC to "sell" from "hold" with a target price of 88.00 riyals. Most other stocks in the petrochemicals sector also fell.
Saudi Arabia's index has technical support at its 200-day average, now at 9,558 points. Dubai's index rose as much as 1.1 percent early in the session as Emaar Properties, the emirate's biggest developer, climbed 1.5 percent after saying it would float a 13 percent stake in its Egyptian subsidiary on the Cairo bourse. But Emaar, which provided no timeline for the move, then gave up all of its gains and closed 0.3 percent lower, while the Dubai benchmark ended 0.5 percent lower.
Logistics firm Aramex, however, edged up 0.3 percent to 3.46 dirhams after NBK Capital increased its fair value estimate for the stock by 15 percent to 4.50 dirhams, citing positive its business outlook, attractive valuation and generous dividends. According to NBK Capital, the slump in oil prices has allowed Aramex to negotiate lower airline fares for flights originating from New York and London, whose effect will seen starting from the second quarter.
Abu Dhabi's bourse also pared early gains and inched down 0.1 percent. National Bank of Ras Al Khaimah fell 1.7 percent after making a public offer on Tuesday to buy shares in Ras Al Khaimah National Insurance Co at a price of 3.64 dirhams per share. Ezdan Holding continued to dominate Qatar's bourse, jumping 3.2 percent and lifting the Doha index 0.5 percent. Index compiler MSCI included the stock in its emerging markets index this month, which is likely to lead to significant one-off inflows from global funds at the end of May when the changes take effect.
VTB Capital has estimated likely passive fund inflows into Ezdan at $59 million. As a proportion of its market capitalisation that may not be enough to justify the stock's 25 percent leap since the MSCI news, but the stock's free float is very small, magnifying its moves. Egypt's index slid 0.6 percent to 8,826 points as many stocks pulled back after gaining strongly earlier this week. The index had surged 7.5 percent in the two previous sessions after the government delayed for two years the introduction of a 10 percent tax on capital gains.
The Cairo benchmark has therefore failed to break decisively above technical resistance at 8,860 points, its early May peak. The news of Emaar Properties pressing ahead with its Egyptian unit's flotation may have prompted some investors to cash out of other stocks in order to take part in the offer, although a timetable for the share sale was not given.
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