Saudi stocks lead Gulf equity drop as trading volumes plummet

Saudi Arabian stocks led a retreat across Gulf Arab equities as trading volumes plunged.

Four benchmark gauges in the six-nation Gulf Cooperation Council declined, with Bloomberg’s GCC 200 Index posting its longest losing streak in two months. Saudi Arabia’s Tadawul All Share Index dropped 1.2 percent as trading volumes sank 23 per cent below the six-month average. Dubai’s DFM General Index lost 0.8 percent as about 123 million shares were traded, 59 per cent below the average.

“After last week’s excitement fueled by foreign inflows, with a few exceptions, things are dull today,” said Akber Khan, who manages $850 million as senior director of asset management at Al Rayan Investment in Doha. “It’s a Sunday in the midst of summer with few results in the region. Volumes are unsurprisingly poor.”

Stock gauges in Dubai, Abu Dhabi, Qatar and Kuwait posted a third week of gains in the five days through Thursday as prospects for stimulus in major economies boosted demand for riskier emerging-market assets. Investors have since moderated their expectations after the Bank of Japan ruled out directly financing government debt and the European Central Bank held back monetary expansion.

The declines in the GCC on Sunday also follow a drop in the price of oil, with Brent crude falling 4 percent last week to $45.69 per barrel. The GCC is home to about a third of the world’s proven oil reserves and equities are closely correlated to crude prices.

Among the biggest contributors to the selloff in Saudi Arabia were real estate companies, with Jabal Omar Development Co. slipping 2.3 per cent, the most in almost a month. Dar Al Arkan Real Estate Development Co. fell 9.2 per cent in its worst day since August.

Qatar’s QE Index retreated 0.5 per cent, declining for a third day, the worst streak in more than a month. Abu Dhabi’s ADX General Index fell 0.5 per cent. Kuwait’s SE Price Index bucked the drop, adding 0.1 per cent as Bahrain’s BB All Share Index was little changed.

Israel’s TA-25 Index of stocks rose 0.1 per cent after gaining for the third week, the longest streak since March. Bezeq Israeli Telecommunication Corp. contributed most to the increases on Sunday as 17 companies advanced, seven fell and one was unchanged.

Shares in Elbit Systems Ltd. gained 1.1 per cent. The Israeli defense company known for making drones and avionics systems is close to buying some assets from Odebrecht Defesa & Tecnologia in Brazil, according to two people familiar with the matter.

The shekel on Friday strengthened for an eighth day against a basket of currencies, including the U.S. dollar and the euro, the longest gaining streak since June 2014.
The last time it was at a similar level, in May, the Bank of Israel purchased the largest dollar amount this year.

The yield on Israel’s 6.25 per cent benchmark bonds due October 2026 fell three basis points, the biggest drop since July 10, to 1.72 per cent.

Egypt’s EGX 30 Index added 0.4 per cent on less than a third of its average trading volume in the past six months. The country has seen its currency tumble to a record in black market trading as a national shortage of dollars intensifies, with dealers demanding more than 35 per cent over the official exchange rate to sell the greenback.