Most major Gulf markets traded in the red on Wednesday with weakness in banking shares weighing and Saudi Arabian stocks underperforming their regional peers.
Saudi Arabia’s index fell 1.5%. Al Rjahi Bank declined 2.5% and the Country’s biggest lender National Commercial Bank slid 2.2%.
Fitch downgraded SABIC and Saudi Aramco to A from A+ after attacks last month on two oil production facilities. It also considered rising geopolitical tensions in the region and the country's continued fiscal deficit.F
The rating agency downgraded Saudi Arabia's credit rating to A from A+ on Sept. 30.
The index has fallen in six of seven sessions this month, leaving it down 1.4% year to date. It had gained more than 20% in the first four months of 2019 in the run up to joining the MSCI and FTSE emerging-market indexes, which helped attract billions of dollars from passive funds.
However, escalating trade tensions, volatile oil prices and growing geopolitical risks have hit the market since then and kept active emerging-market funds from investing in the kingdom.
An analysis by Copley Fund Research showed that high valuations and reputation risks have deterred investors.
In Egypt, the blue-chip index slipped 1.2% with most of its stocks falling and market heavyweight Commercial International Bank decreasing 1.1%.
Stock exchange data showed local investors were net sellers of Egyptian stocks.
In Abu Dhabi, the index slipped 0.3%, led by a 0.5% drop in First Abu Dhabi Bank and Abu Dhabi Commercial Bank.
Financials also hit the Qatar index, which closed 0.7% lower with Qatar Islamic Bank down 1% and Qatar National Bank (QNB) falling 0.7%. After the market closed, QNB reported a 4% rise in nine-month net profit, broadly in line with analyst estimates.
However, banks led gainers on the Dubai index, which rose 0.5. Emirates NBD increased 0.8% and Dubai Islamic Bank was up 0.6%.
(Reporting by Maqsood Alam and Shamsuddin Mohd in Bengaluru; Editing by Kirsten Donovan) ((Maqsood.Alam@thomsonreuters.com;))