Stock markets in Qatar and Saudi Arabia were pulled lower yesterday by two blue-chip companies whose weak second-quarter earnings missed forecasts, while Egypt was hurt by a fresh slide of its currency in the black market.
Qatari banks fell, even though they had reported strong earnings at the start of this week.
The main Qatari index dropped 0.5% to 10,592 points, but closed 81 points above its session low.
In Saudi Arabia, Saudi Electricity Co (SEC) dropped 0.5% after it reported a 28% fall in second-quarter net profit to 1.4bn riyals ($381mn). Analysts at NCB Capital had forecast 2.4bn riyals.
SEC cited the higher cost of fuel and depreciation of assets, without elaborating.
The kingdom’s 2016 state budget contained hikes in fuel and electricity prices but the company had previously said these would not have a significant effect on its earnings overall.
The main Saudi index edged down 0.2%.
But some Saudi banks fared well after several reported earnings that met expectations.
Saudi Hollandi Bank rose 0.8% after reporting a flat net profit of 540mn riyals, beating the average analyst forecast of 508mn riyals.
In Egypt, the main index extended the previous day’s decline and dropped 1.2% after the Egyptian pound weakened to 11.75 per dollar on the black market, its lowest level since that market emerged. The central bank has been keeping the currency artificially fixed at 8.78 pounds since its devaluation in mid-March.
Since the central bank’s comments to local media on July 3 about the fixed currency rate being a “mistake”, the pound has tumbled in the black market, and economists believe a further devaluation — possibly accompanied by further interest rate hikes — may be imminent.
The March devaluation triggered a strong rally in the stock market on hopes that it would prompt foreign fund inflows, but that largely did not happen, so investors are more gloomy this time around.
Nine-tenths of traded shares declined yesterday with heavily traded Orascom Telecom dropping 3.6%.
Ezz Steel, hit by the country’s gas shortage, sank 3.9% after it reported its first-quarter net loss widened from a year earlier.
In Dubai, Emaar Properties climbed 1.7% to Dh7.02, its highest close in 11 months, in active trade.
It closed above technical resistance on its October 2015 peak of Dh7.01; another such close today would trigger a reverse head and shoulders pattern formed by the highs and lows since last August and pointing up in the long term to at least the April 2015 peak of Dh8.39.
“Passive emerging market funds, which have been underweight the region, are now accumulating shares in companies such as Emaar to ensure equal weights,” said a Dubai-based equity portfolio manager.
Buying of Emaar was also encouraged this week by local consultancy ValuStrat saying the Dubai real estate market had a good chance of starting to recover in the second half of 2016, although many other analysts think property prices have further to fall.
Dubai’s main stock index added 0.6% yesterday.
Abu Dhabi’s index climbed by the same margin with support from large-caps; Aldar Properties, the largest listed property developer in Abu Dhabi, jumped 4.3%.
Elsewhere in the Gulf, the Kuwait index rose 0.2% to 5,379 points, the Oman index dropped 0.4% to 5,817 points and the Bahrain index fell 0.4% to 1,158 points.