Petrochemical stocks pulled Saudi Arabia's main equity index down on Wednesday in the wake of gas feedstock price rises in the 2016 state budget, while Egypt's market rose in a broad-based rally, breaking technical resistance. The Saudi index, which had dropped 0.9 percent on Tuesday in an initial reaction to the budget's austerity measures, fell a further 0.4 percent.
Saudi companies have begun estimating the impact on their cost bases of energy and feedstock price rises in the budget. Petrochemical producers are hardest hit, with Saudi Basic Industries (SABIC) projecting an 8-percent rise in its 2016 costs. The estimated cost increases are smaller than some analysts had anticipated, and may be mitigated to some extent by efficiency gains at the companies. Nevertheless, retail investors reacted negatively and SABIC shares fell 2.6 percent, with the petrochemical sector index dropping 2.9 percent. Miner Ma'aden dropped 1.5 percent; it said it was still calculating the impact.
But telecommunications firm Mobily rose 1.8 percent after saying it had agreed with the majority of its lenders to waive a breach of covenant under loan facilities totalling 12.1 billion riyals. In a sign of further austerity to come, finance minister Ibrahim Alassaf said the kingdom expects to introduce value-added tax in two years, aiming for a tax rate of about 5 percent, the Saudi-owned Al-Hayat newspaper reported. Most other Gulf markets rose. Dubai's index was up 0.5 percent as financial firm Shua Capital rose 4.4 percent; the stock has seen unusually heavy volumes in the past week.
Abu Dhabi's index fell 0.5 percent as bluechip lender First Gulf Bank lost 2.3 percent. Qatar rose 0.4 percent as Qatar National Bank, the biggest lender, added 0.6 percent. Egypt's index surged 2.7 percent to 6,981 points in rising turnover with exchange data showing non-Egyptian Arab investors were heavy net buyers. The index's break of technical resistance on its December peak triggered a minor double bottom formed by the November and December lows and pointing up to about 7,400 points. Palm Hills Development climbed 2 percent while Ezz Steel was flat after saying it had narrowed its net loss in the third quarter of this year by 21.5 percent from a year earlier.
SAUDI ARABIA: The index fell 0.4 percent to 6,907 points.
DUBAI: The index rose 0.5 percent to 3,150 points.
ABU DHABI: The index fell 0.5 percent to 4,276 points.
QATAR: The index rose 0.4 percent to 10,436 points.
EGYPT: The index gained 2.7 percent to 6,981 points.
KUWAIT: The index rose 0.5 percent to 5,612 points.
OMAN: The index rose 0.3 percent to 5,444 points.
BAHRAIN: The index edged up 0.2 percent to 1,205 points.