Weak Earnings and Volatile Oil Prices: Saudi Shares Fall

Saudi Arabian shares extended losses on Sunday, debilitated by disappointing corporate earnings, volatile energy markets, and the assumption the U.S. Federal Reserve will hike interest rates next week.

Most Gulf currencies are fixed to the dollar and Qatar, Saudi Arabia, and the United Arab Emirates normally copy any financial policy change in the United States. The benchmark index in Saudi Arabia declined 0.7%, pulled down by a 2% drop in SABIC Industries shares after the company revealed a lower quarterly benefit.

The petrochemical maker posted a quarterly net benefit after zakat and tax installments of 1.84 billion riyals ($489.62 million), down from 5.6 billion riyals a year ago. Another petrochemical producer Nama Chemicals posted a quarterly loss of 5.4 million riyals compared to a profit of 4.9 million riyals a year ago.

Saudi National Bank, unable to recover the losses of the last three sessions, settled down at 3.3%, wiping off 8.9 billion riyals from the company’s market cap. On Thursday the kingdom’s largest bank said that it will invest up to 1.5 billion Swiss francs ($1.52 billion) in scandal-ridden Credit Suisse Group’s capital-raising to take an up to 9.9% stake.

On Friday, crude prices – a catalyst for the Gulf’s financial markets – fell as top crude importer China widened its COVID-19 curbs in several cities. In Qatar, the index eased 0.1%, as several stocks were in the negative territory including Industries Qatar, which fell 2%.

The petrochemical company reported a more-than-23% drop in its third-quarter profit to 1.6 billion Qatari riyals ($439.56 million) on Thursday. The Qatari stock market remains exposed to corrections as natural gas prices could suffer a volatile week, according to Daniel Takieddine, CEO of MENA BDSwiss.

“The latter could be affected by the lack of processing capacity in Europe and higher-than-expected temperatures on the continent,” he said. Outside the Gulf, Egypt’s blue-chip index added 0.3%, holding gains for a fifth straight session.

Egypt aims to give income tax breaks to companies of as much as 55% for some, Prime Minister Mostafa Madbouly said on Tuesday. Shares in Alexandria Container and Cargo Handling rose 7.3% after a 9.1% surge in the previous session.

Earlier, the company recorded 669.20 million Egyptian pounds ($28.12 million) during the first quarter of the fiscal year, a yearly increment of 98.97% from 336.33 million Egyptian pounds.