The main Saudi index fell 0.6% to 9,629 points yesterday and petrochemicals major Sabic, down 1.3%, was one of the main drags

Reuters/Dubai


Cheaper oil dragged down Gulf stock markets yesterday, while Egypt rose after an international conference pledged tens of billions of dollars of investment for the country.
Brent crude settled near a one-month low below $55 a barrel on Friday and fell 9% on the week, hit by a renewed rally in the dollar and a warning by the International Energy Agency that the oil glut is still growing.
Prices of many petrochemical products are linked to the price of oil, and cheaper oil squeezes the margins of Gulf producers.
The main Saudi index fell 0.6% to 9,629 points yesterday and petrochemicals major Saudi Basic Industries Corp (Sabic), down 1.3%, was one of the main drags.
Sabic’s affiliate Saudi Kayan Petrochemical Co dropped 3.9% after it extended maintenance work on its olefins plant in Jubail due to a technical fault.
Saudi Electricity Co tumbled 6.6% after its chief executive Ziad bin Mohammed al-Shiha told the al-Arabiya television station that no decision had been made yet on raising the tariffs that the company charges its customers.
Some senior officials in Saudi Arabia, including its central bank governor, have in the last few months suggested cutting energy subsidies and raising the tariffs, which would boost the company’s bottom line. The stock is still up 19.1% year-to-date, ahead of the main index, which has gained 15.5%.
Yesterday’s retreat meant the Saudi stock index failed to cleanly break major technical resistance on the 200-day average, now at 9,661 points. It has support at 9,544 points, the February peak which it broke this month.
Dubai’s index sank 2.5% as most stocks declined. Bahraini investment bank GFH was one of the most traded stocks and tumbled its daily 10% limit after its board proposed a capital reduction and no dividend payments for 2014.
GFH swung to a profit last year, but said in a statement yesterday that it needed to address accumulated losses before it could pay dividends.
Kuwait’s bourse, where GFH shares fell 10.6% yesterday, subsequently suspended the stock and cancelled all of yesterday’s trades, saying this was because GFH had not notified it about the capital reduction plans in advance.
Abu Dhabi stocks fell 1.3% in another broad sell-off, although National Bank of Abu Dhabi jumped 2.3% ahead of its dividend registration date.
Egypt’s stock index rose 0.9% after a carefully orchestrated stream of positive announcements from the investment summit in Sharm el-Sheikh at the weekend.
Gulf allies pledged a further $12bn of investments and central bank deposits for Cairo at the event, and global players such as BP, BG, Eni and PepsiCo also promised to invest heavily.
Property firm Palm Hills Development, up 2.7%, led gains after announcing a deal to develop a new project with the government.
Also, Egypt’s housing minister on Friday confirmed plans to build a new administrative capital east of Cairo within five to seven years at a cost of $45bn, a move likely to boost the real estate development and construction industries.
Orascom Construction surged 5.0% on NASDAQ Dubai, after dropping 12.5% from its initial public offer price last week on apparent selling by Egyptian investors obtaining hard currency. It edged up 0.5% in Cairo, where it had not fallen so sharply.
Elsewhere in the Gulf, Oman’s index fell 1.5% to 6,301 points, while Bahrain’s index declined 0.4% to 1,477 points.