Boursa Kuwait drops 1.9%, Gulf markets edge lower

KUWAIT: Traders watch the price monitors at the trading floor of Boursa Kuwait yesterday. —Photo by Yasser Al-Zayyat

DUBAI: Saudi Arabia’s shares plunged as much as 7 percent yesterday as investors worried about deteriorating relations with the international community after the disappearance of Saudi journalist Jamal Khashoggi.

The Tadawul All-Shares Index (TASI) quickly lost more than 500 points on the first trading day of the week, wiping out all the gains it had made since the start of the year.

The index had already dropped 3.0 percent on Thursday, following a rout on world stock markets fuelled by worries about higher interest rates and US President Donald Trump’s attacks on the Federal Reserve. The TASI was trading at just above 7,000 points, a 10-month low, having reversed all of the 18-percent gain it had notched up since the start of 2018. All 15 sectors in the market were in the red while almost all listed shares dropped.

In just two sessions the Saudi bourse, the largest in the Arab world, has shed almost $50 billion of its capitalisation, which now stands at around $450 billion.

The index suffered its biggest intraday decline since December 2014, when oil prices were crashing, with the Gulf region’s biggest petrochemical producer, Saudi Basic Industries, tumbling as much as 7.9 percent.

By the close, the Saudi market had recovered some of its losses, ending down 3.5 percent. Saudi Arabia’s stock market is due to be reclassified by MSCI as an emerging market next year.

“It’s the political environment. The market is reacting negatively to sentiment around the Khashoggi case and the political noise around it,” said Salah Shamma, head of investment for the region at Franklin Templeton Emerging Markets Equity, a big global fund manager.

The Saudi exchange reported that foreigners were net sellers in the market in the week ended Oct. 11. Foreigners sold 1.62 billion riyals worth of shares, and bought 995.8 million riyals.

Shamma noted the fundamental situation of the Saudi economy had not so far been affected. But regional traders said speculation the Khashoggi case might deter some inflows of foreign investment – and that a backlash in the US Congress could lead to US sanctions against some Saudi individuals – had triggered panic selling of stocks by some local investors.
“It seems that international accounts are punishing the Saudi exchange,” a regional broker added. Khashoggi, a prominent critic of Riyadh and a US resident, disappeared on Oct 2 after visiting the Saudi consulate in Istanbul.

US President Donald Trump said on Saturday there would be “severe punishment” for Saudi Arabia if it turned out that Khashoggi was killed in the consulate.

Media companies and some technology executives have pulled out of a major Saudi investment conference scheduled for next week in Riyadh because of growing outrage over the disappearance.

Boursa Kuwait declined 1.9 percent after regional investment bank EFG Hermes cut its target price for the company by two percent to 0.46 Kuwaiti dinars .

Other stock markets in the Gulf were dragged lower, with the Dubai index sinking 1.5 percent. State-owned Abu Dhabi National Oil Co (ADNOC)’s listed unit, ADNOC Distribution, declined 3.5 percent even after shareholders approved an interim dividend of 0.06 dirhams a share.
In Egypt, the blue-chip index rose two percent.

Shares of Egyptian property developer Medinet Nasr rallied 10 percent after property firm SODIC said it intended to make a tender offer to acquire the company through a share swap.
Oman’s benchmark rose 0.2 percent, lifted by HSBC Oman which reported a nine-month profit of 25 million rials, compared with 13.7 million rials the same period a year earlier. Shares of HSBC Oman rose 3.4 percent. – Agencies