Monday, 31 August 2015 17:20
DUBAI: Stock markets in Saudi Arabia and Egypt fell in early trade on Monday after oil prices dropped and emerging market equities in Asia slipped.
The main Saudi stock index fell 1.6 percent, with petrochemicals heavyweight Saudi Basic Industries (SABIC) the main drag. It slid 2.2 percent, in line with the price of oil, which affects the industry’s profit margins.
Brent crude futures for October delivery have dropped more than $ 1 or 2 percent on Monday as traders book profits after last week’s rally, which saw the biggest two-day rise in six years.
Other Saudi equities sectors were also weak. Al Tayyar Travel tumbled 4.4 percent after the firm said its founder Nasser bin Aqeel al-Tayyar would resign as vice-chairman and managing director from Sept. 1.
Egypt’s bourse slipped 0.3 percent, tracking MSCI’s emerging markets index, which was down just as much.
But Ezz Steel surged 6.3 percent after Italian energy major Eni announced the discovery of a potentially large natural gas field off the Egyptian coast on Sunday.
As a major energy consumer, Ezz Steel is suffering from gas shortages, and a boost to supply could allow it to ramp up production, analysts say.
“We consider this development could potentially translate into a re-rating of all the major energy-intensive companies in the country,” NBK Capital said in a note on Monday.
“Over the past two years, gas unavailability has translated into significant lower operating rates and/or shrinking margins across the industries, specifically fertilisers, steel and cement.”
