Banks hold back Tadawul’s gains; key index falls 0.2%

Banks were the main drag on Saudi Arabia’s stock market on Monday as investors grew wary before second-quarter financial results, while most other Middle East bourses recovered some of the losses from the sell-off after Britain’s Brexit vote.

Riyadh’s benchmark Tadawul All-Share Index fell by 0.2 percent as banking shares were sold in the final hour of trade. Al-Rajhi, the sector’s largest Islamic bank, lost 2.2 percent to SR56.50 and the sector’s sub-index dropped 0.8 percent.
A note from Riyad Capital said that tight liquidity and pressure on deposits are among the biggest challenges facing the banking sector this year.
“In the absence of an inflow of fresh money into the interbank system, these trends will continue,” it said.
Analysts at Riyad Capital still have “buy” ratings on Saudi Hollandi Bank, Banque Saudi Fransi, Saudi British Bank and Samba Financial Group but a “neutral” rating on Al-Rajhi, saying it is relatively close to a fair-value price of 64 riyals per share.
Qatar’s index edged 0.3 percent lower in thin volume. Stocks within MSCI’s emerging market index led losses, with Industries Qatar down 1 percent.
Egypt’s main index, which had plunged 5.5 percent on Sunday, bounced 0.8 percent with gainers outpacing losers 16 to 11. Orascom Telecom, the most heavily traded stock and one favored by local day traders, gained 3.8 percent.
Commercial International Bank (CIB), the largest listed lender, fell back 0.5 percent, having risen by 2.2 percent in early trading after the central bank said it would not impose nine-year term limits on bank chief executives.
Dubai’s index, which slid by 3.3 percent on Sunday, rose 0.9 percent with more than three fifths of traded shares advancing.
Small and mid-sized stocks favored by local retail investors were the most active, with Islamic insurer Dar Al-Takaful hitting its 15 percent daily gain limit.
Union Properties, a developer with a residential rental unit, gained 1.8 percent.
Real estate consultancy JLL said that Dubai’s expatriate population is likely to continue renting their homes rather than switching to ownership, but that real estate markets in other major Gulf cities will feel little impact from a British exit from the European Union because their property markets are more focused on local citizens.
The Abu Dhabi the index added 0.4 percent, after dropping 1.9 percent on Sunday. Gainers outnumbered losers 14 to four.
Finance House rose 2.9 percent in very thin trade after the company said it had received regulatory approval for a share buyback. It gave no further details.

Source: Arab News