DUBAI- Insurance stocks helped to drag down Saudi Arabia's market on Wednesday because of fears of a shakeout in the industry, while bourses in the United Arab Emirates and Qatar rose, helped by a bullish global trend in equities.
The main Saudi index
.TASI
sank 2.2 percent to 6,890 points, closing significantly below the 200-day moving average, now at 7,042 points, for the first time since last November.
Shares in 32 of Saudi Arabia's 33 listed insurance firms tumbled, with several losing more than 7 percent. Only Bupa Arabia
8210.SE
, a favourite of foreign investors, escaped a drop, closing flat.
Most insurers had slid on Tuesday after regulators ordered nine insurance brokers to stop business, citing regulatory violations. The central bank has taken a tough stance on compliance in the sector during recent months, suspending business at several firms, and investors are bracing for a possible shakeout in the sector.
The central bank is preparing to introduce a new supervisory framework in coming months that will force insurers to boost capital as well as improve internal risk controls, two people with direct knowledge of the matter told Reuters.
Central bank officials "said half of the companies that are here today will not be here", one of the sources said. "They want stronger companies in the market."
Bank Aljazira
1020.SE
, which had plunged its 10 percent daily limit on Tuesday after announcing it would resubmit a request to the regulator for approval of a 3 billion riyal ($800 million) rights issue, fell a further 6.4 percent in heavy trade.
Banque Saudi Fransi
1050.SE
dropped 2.7 percent in its sixth straight day of falls. The bank said it had appointed an independent team to examine violations related to its employee incentive programme in past years, though it expects no material change in its financial statements.
Among other big losers, petrochemical blue chip Saudi Basic Industries
2010.SE
lost 2.8 percent. Telecommunications firm Mobily
7020.SE
fell 2.6 percent to an 11-year low.
In Dubai, the index
.DFMGI
rose 0.8 percent on the back of a 1.4 percent rise by Emaar Properties
EMAR.DU
, while a 2.5 percent rise by Dana Gas
DANA.AD
helped the Abu Dhabi index
.ADI
climb 1.0 percent.
Qatar
.QSI
rose 1.0 percent, gaining for a fourth straight day in a technical rebound from five-year lows. Bourse data showed non-Gulf foreign investors were net buyers by a ratio of about 4:3 and accounted for 43 percent of all buying. Doha Bank
DOBK.QA
jumped 3.4 percent.
Egypt's index
.EGX30
edged down 0.1 percent. Ezz Steel
ESRS.CA
dropped 3.8 percent to 17.27 Egyptian pounds after a 2.4 percent fall on Tuesday, when the company reported a quarterly consolidated net loss attributable to shareholders of 550.1 million pounds ($31.3 million) versus a loss of 239.6 million pounds a year earlier.
Pharos Research reiterated its "underweight" rating of the stock with a fair value of 14.00 pounds, saying difficulty in financing working capital would hold the company back from improving utilisation rates at its plants.
HIGHLIGHTS
SAUDI ARABIA
* The index
.TASI
sank 2.2 percent to 6,890 points.
DUBAI
* The index
.DFMGI
rose 0.8 percent to 3,638 points.
ABU DHABI
* The index
.ADI
gained 1.0 percent to 4,515 points.
QATAR
* The index
.QSI
climbed 1.0 percent to 8,334 points.
EGYPT
* The index
.EGX30
edged down 0.1 percent to 13,816 points.
KUWAIT
* The index
.KWSE
rose 0.2 percent to 6,626 points.
BAHRAIN
* The index
.BAX
gained 0.3 percent to 1,275 points.
OMAN
* The index
.MSI
slipped 0.2 percent to 5,122 points.
(Reporting by Andrew Torchia) ((andrew.torchia@thomsonreuters.com)(+9715 6681 7277)(Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))