Most stock markets in the Gulf fell on Tuesday after a rebound in the Brent oil price proved short-lived and foreign fund inflows into Saudi Arabia remained tiny following the market's opening to international institutions this week. The main Saudi index slipped 0.2 percent as heavyweights Saudi Basic Industries and National Commercial Bank lost 0.4 and 0.8 percent respectively.
Most other components of the provisional MSCI Saudi Arabia index also fell, having rallied in previous weeks in anticipation of increased demand when the market opened to direct foreign investment on June 15. Modest trading volumes on Monday and Tuesday indicated there were no large fund inflows from abroad. Only one foreign institution, HSBC, has so far said it has obtained a licence to invest, though stock exchange chief executive Adel al-Ghamdi told Reuters that regulators were processing six applications.
Saudi stock exchange data released on Tuesday showed that qualified foreign institutions had invested very small amounts - no more than 0.02 percent of each company - on Monday in a handful of stocks, including petrochemical firms Sipchem and PetroRabigh, healthcare companies Dallah and Mouwasat and medical insurer Bupa Arabia. The latter three all rose on Tuesday as they are not part of MSCI's provisional Saudi index and had therefore not been bid up before the market opening. Bupa Arabia edged up 0.4 percent, Mouwasat added 0.3 percent and Dallah climbed 1.7 percent.
Several bluechip stocks also bucked the downward trend on Tuesday, including lenders Al Rajhi Bank, up 1.3 percent, and Samba Financial Group, up 0.3 percent. Al Rajhi is the biggest retail player in Saudi Arabia and Samba also has a significant share of demand deposits which bear no interest. This positions those banks well for an expected increase in US interest rates, which the Federal Reserve may signal this week.
Dubai's index was the day's biggest loser, closing 0.9 percent lower as trading on the bourse focused on the shares of Amlak Finance, which is not part of the benchmark. Amlak closed flat after surging as much as 7.8 percent during the day and accounting for 57 percent of total traded value. The mortgage lender has dominated stock market activity in the emirate since it resumed trading this month following a six-year suspension during which it restructured debt.
The extremely volatile stock more than doubled in a week, then tumbled 10 percent for two days in a row and began climbing again on Monday. Analysts say its movements are purely speculative. Late in the session, investors switched to another stock that often becomes a target of speculators, Dubai Parks and Resorts. The stock jumped 2.6 percent to an all-time closing high of 1.20 riyals even though the company, which is building several theme parks, made no announcements and does not expect to make a profit until 2018.
Bourses in Abu Dhabi and Qatar slipped 0.1 and 0.3 percent on low volumes. Egypt's index, on the other hand, rose 0.5 percent as most stocks closed higher. The Cairo government has entered into an initial agreement with China over 15 investment projects worth about $10 billion, Egyptian trade minister Mounir Fakhry Abdel Nour said late on Monday. The projects would mainly focus on the electricity and transport sectors but would also include Chinese direct investment in other areas, he said.
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