Saudi Stocks Playing Emerging Market Catch-Up Drag Down Persian Gulf

EghtesadOnline: Saudi Arabian stocks declined the most in the Persian Gulf as the kingdom’s equities traded for the first time in a week, catching up with a selloff across developing nations as investors weigh the chances of a U.S. interest rate increase this year.

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18 September 2016

The Tadawul All Share Index dropped 1.1 percent as of 10:42 a.m. in Riyadh as it reopened after a week-long religious holiday. That dragged Bloomberg’s GCC 200 Index, a measure of the largest and most liquid companies in the six-nation Gulf Cooperation Council, down 0.4 percent to a two-week low, reports Bloomberg.

Emerging-market stocks posted the steepest five-day drop in more than four months last week amid growing speculation the Federal Reserve may increase interest rates by year-end, diminishing the appetite for riskier developing-nation assets. Meanwhile, oil retreated last week on speculation that Libya and Nigeria are preparing to boost exports, adding to growing skepticism that the Organization of Petroleum Exporting Countries and Russia will agree on measures to stabilize the market at a meeting in Algiers later this month.

“Saudi stocks are basically pricing in the long period without trade during which emerging markets dropped considerably,” said Saleem Khokhar, the Abu Dhabi-based head of fund management and equities at the asset-management group of National Bank of Abu Dhabi PJSC, the United Arab Emirates’ second-biggest bank. “Expectations for the talks in Algiers are not so high any more, which is not good for Saudi Arabia at all.”

The Tadawul was poised for its lowest closing level since Sept. 4. Saudi Basic Industries Corp., National Commercial Bank and Jabal Omar Development Co. were the biggest contributors to the gauge’s loss, declining at least 1.5 percent.

Dubai’s DFM General Index, Abu Dhabi’s ADX General Index and Bahrain Bourse All Share Index all gained at least 0.1 percent. Oman’s MSM 30 Index advanced less than 0.1 percent and Qatar’s QE Index added 0.3 percent as it rose for the first time in five days.