|28 November, 2019

Gulf stocks slide as MSCI rebalancing prompts passive fund outflows

In Dubai, the index ended flat as gains in industrials were offset by losses in property stocks

Traders react during the opening of the Dubai stock market June 26, 2016. Image used for illustrative purpose.

Traders react during the opening of the Dubai stock market June 26, 2016. Image used for illustrative purpose.

REUTERS/Ahmed Jadallah

Gulf stock markets fell on Tuesday, with the Saudi index leading the losses after MSCI rebalancing that triggered passive fund outflows, while Egyptian stocks also came under pressure.

Saudi Arabia's benchmark index slid 1.7%, dragged down by a 3.3% drop in Al Rajhi Bank and a 4% plunge in National Commercial Bank.

Among other stocks, Saudi Basic Industries and Savola Group eased 3% and 5.6% respectively.

Global index provider MSCI on Tuesday implemented the final step of the weight increase of mainland Chinese stocks, or A shares, in its widely followed emerging markets benchmark

Rebalancing of MSCI resulted in outflows by passive funds, causing some pressure on the market, so some rebound could come into play, said Vrajesh Bhandari senior portfolio manager at Al Mal Capital "In Saudi Arabia, post the Aramco IPO, excess liquidity will return to the broader market," Bhandari added.

The Qatari index slid 1.2% as declining stocks outnumbered the gainers, with Qatar Fuel down 4.5% and Qatar National Bank losing 1.9%.

Separately, Turkish and Qatari central banks on Monday increased the overall limit of a swap agreement between them to $5 billion equivalent of lira and riyals, from $3 billion previously.

The deal aims to facilitate bilateral trade in respective local currencies and support the countries' financial stability.

In Dubai, the index ended flat as gains in industrials were offset by losses in property stocks.

Budget airline Air Arabia jumped 4.9% to become the top gainer while logistics company Aramex closed 2.5% up.

In real estate, Emaar Properties lost 1.4% while Deyaar Development retreated by 2%.

However, Dubai Islamic Bank gave up early gains to close with a 0.4% decline. The lender called a shareholder meeting for Dec. 17 to approve the acquisition of Noor Bank.

The Abu Dhabi index dropped 0.9% as the country's largest lender First Abu Dhabi Bank shed 0.8% and telecoms group Etisalat fell 1.7%.

Egypt's blue-chip index dipped 1.4%, with 27 of its 30 stocks declining. Egypt Kuwait Holding shed 3.5% and Commercial International Bank lost 0.5%.

SAUDI ARABIA fell 1.7% to 7,878 points

ABU DHABI fell 0.9% to 5,046 points

DUBAI was flat at 2,705 points

QATAR dropped 1.2% to 10,191 points

EGYPT down 1.4% to 13,782 points

BAHRAIN was flat at 1,520 points

OMAN slipped 0.5% to 4,064 points

KUWAIT declined 0.8% to 6,373 points

(Reporting by Ateeq Shariff in Bengaluru Editing by David Goodman)

© Reuters News 2019

More From Equities