Gulf stock markets were weak on Monday as Saudi Arabia swung widely, hit by plans for reforms to the telecommunications industry, but Egypt rose sharply on hopes that its International Monetary Fund loan would be finalized soon.
Tadawul All-Share Index fell more than 2 percent at one stage as Saudi Telecom tumbled as much as 8.5 percent after the government said it would provide telecommunications firms with “unified licenses” allowing them to offer a full range of services.
The total value of traded shares reached SR3.42 billon with a volume 256 million.
Analysts said this could mean more competition for Saudi Telecom. The stock closed 4.9 percent lower and the Saudi index finished down 0.6 percent at 5,416 points, its lowest close since March 2011, in active trade.
On Sunday, the index tumbled 3.1 percent.
Austerity worries caused many stocks exposed to domestic demand to underperformed again on Monday. Retail chain Jarir Marketing sank 4.7 percent and Al-Rajhi Bank lost 1.5 percent. On Sunday, the central bank told commercial banks to reschedule the consumer loans of customers hit by the public sector pay cuts, which could cost banks money.
Petrochemical shares, dependent on overseas demand, fared relatively well with Saudi Basic Industries Corp. up 0.6 percent.
Petrochemical Industries index gained 0.9 percent to 4,280.32 points despite a fall in the share prices of Tasnee and Yanbu National Petrochemical Company.
There was massive trade in a rights issue of Takween Advanced Industries — the trading period for the rights ends on Thursday. The rights soared 28.7 percent while the underlying shares gained 1.4 percent to 11.05 riyals.
Elsewhere in the Gulf, where most bourses had been closed on Sunday for Islamic New Year holidays, sentiment was weak partly because of concern about the Saudi market.
Dubai’s index fell 1.9 percent to 3,408 points, breaking technical support on the August and September lows of 3,430-3,442 points. That triggered a minor head & shoulders pattern formed by the highs and lows since July and pointing down to around 3,250 points.
Builder Drake & Scull, which has substantial operations in Saudi Arabia, dropped 3.2 percent.
Abu Dhabi lost 1.8 percent as First Gulf Bank slid 2.5 percent, while Qatar fell 0.9 percent as Qatar National bank, the region’s largest listed lender, sank 1.9 percent.
In Egypt, the market rose sharply on hopes that an international financing package would be finalized soon after this week’s annual meetings of the IMF and World Bank Group.
The Egyptian stock index climbed 3.2 percent in a broad rally, with investment bank EFG Hermes rising 6.5 percent.
Egypt has reached a staff-level agreement for a $12 billion loan program from the IMF and must secure around $6 billion in bilateral financing to obtain final approval for the program. It has been in talks with China for $2 billion, while Saudi Arabia and other rich Gulf states may also provide money.
Officials attending the Washington meetings could finalize the bilateral financing, and Arqaam Capital said in a report that the IMF’s board might then give final approval to its program as soon as in the following week.
Arqaam said that at the same time, Egypt might also, at about the same time, take another major step to attract foreign fund inflows and resolve an endemic hard currency shortage with an aggressive devaluation of the Egyptian pound, perhaps to 12 against the US dollar or beyond compared with its current official rate of 8.88.
The central bank could move to a new, hybrid foreign exchange system combining managed and free floats, while hiking interest rates by between 1 and 3 percentage points to ensure market stability, Arqaam said.

Source: Arab News