Israel-Hamas War: Saudi Stocks Erase Gains - Bloomberg
Saudi Arabia’s benchmark Tadawul All Share Index erased all yearly gains as the conflict between Israel and the militant group Hamas compounded risks in a market already buffeted by monetary and geopolitical headwinds.
The stock index fell as much as 1% on Thursday, extending weekly losses and wiping out all gains made this year. The Tadawul had rallied as much as 19% from March lows through July, stopping shy from entering a bull market.
Concerns are mounting that the conflict between Israel and Hamas escalates into a wider conflict that endangers crude flows. Oil is edging higher on Thursday after OPEC+ leaders Saudi Arabia and Russia reaffirmed their close cooperation in the market.
This week’s drop extends a decline in the MSCI GCC Countries Combined Index to over 6% in 2023 amid the uncertain outlook for monetary policy and geopolitics.
Saudi banks — which comprise 36% of the Tadawul — are under pressure as elevated interest rates curb demand for credit and rising debt refinancing costs make it harder for companies to honor loans. Upcoming third quarter earnings are also expected to be mixed for some sectors amid weakening demand and and higher costs.
“We expect investors to remain on the sidelines as the drop in markets this week is just an extension of the consistent drop we’ve seen recently,” said Junaid Ansari, director of investment strategy and research at Kamco Investment Co. “We prefer to wait for any positive catalyst to take position in regional markets especially given the uncertain situation related to interest rate hikes and the looming economic slowdown expected next year.”
UAE Defense Firm Edge Weighs Turkey Investments With Aselsan ASELS, Baykar - Bloomberg
Abu Dhabi-owned defense company EDGE Group said it’s weighing billions of dollars of investments in Turkey after it signed preliminary deals with firms including Aselsan Elektronik Sanayi and drone-maker Baykar Teknoloji.
EDGE Chairman Faisal Al Bannai met with heads of major defense companies in Turkey to discuss possible acquisitions, joint development projects and purchase of military systems.
The company has earmarked an investment budget of “a few billion dollars,” Al Bannai said in an interview on Wednesday in Turkey’s capital, Ankara. “What part of that will go into Turkey depends on what opportunities are there. If there is opportunity for half a billion dollars, $1 billion, $2 billion — whatever — then we will invest.”
Aselsan shares climbed as much as 5% after the news and were trading 3.1% higher as of 3:18pm in Istanbul. Riot-truck maker Katmerciler was also up 1.6% after erasing earlier losses.
Abu Dhabi, the oil-rich capital of the United Arab Emirates, is seeking collaboration in autonomous and electronic warfare systems as well as smart weapons, Al Bannai said. His meetings with top Turkish firms, including drone-maker Baykar, follow a pledge by the UAE to invest more than $50 billion into Turkey’s economy.
Oman OQ Gas Networks Draws $10 Billion in Orders for Stock Sale - Bloomberg
Omani state energy firm OQ SAOC raised 288.2 million riyals ($748.6 million) in the initial public offering of its gas pipelines business after pricing it at the top of the range, making it the country’s biggest listing on record.
OQ sold about 2.1 billion shares, or a 49% stake, in OQ Gas Networks SAOG at 140 baisas per share, according to a statement Thursday. The listing drew about 4 billion rials in demand, showing investor appetite for share sales in the Gulf remains strong even as war flared up between Israel and Hamas.
The offering just surpasses Oman Telecommunications Co. SAOG’s $748 million IPO in 2005 as Muscat’s largest.
So far, IPOs in the Persian Gulf appear to be bucking concerns about the resurgence of conflict in the Middle East and its implications for crude oil supplies. Regional stock markets fell sharply on Sunday in the wake of Hamas’ surprise attack on Israel but broke the losing streak on Tuesday.
On Wednesday oil driller ADES Holding Co., backed by Saudi Arabia’s sovereign wealth fund, jumped as much as 30% — the maximum allowed — on its debut after the kingdom’s biggest IPO of the year.
Aster Shares Jump as $1.5 Billion Unit Draws BPEA, OTPP Interest - Bloomberg
Private equity firm BPEA EQT and Ontario Teachers’ Pension Plan Board are among firms considering a deal to acquire Aster DM Healthcare Ltd. assets including its India business, according to people familiar with the matter.
BPEA EQT and OTPP have expressed preliminary interest in the hospital operator’s business in the South Asian nation, the people said. A deal would help the investors tap into the growth potential of health-care services in the country, the people said, asking not to be identified because the matter is private. Others interested in potential bids for Aster’s India business include Blackstone Inc. and KKR & Co., the people said.
Aster shares soared as much as 9.6% on Thursday, the most in three months, according to data compiled by Bloomberg. They were up 6.9% at 9:31 a.m. in Mumbai, valuing the company at about $2.1 billion.
Prospective acquirers could decide to team up, and deal considerations could also lead to other transactions, including a full takeover of the company, the people said.
Separately, Dubai-based private equity firm Fajr Capital is part of a consortium seeking to buy a majority stake in Aster’s Gulf business, Bloomberg News reported in March.
Most Gulf shares rise on strong oil; Mideast conflict in focus | Reuters
Most stock markets in the Gulf rose on Thursday, tracking higher oil prices, while traders kept an eye on the conflict between Palestinian militants and Israel.
Oil prices - a key catalyst for the Gulf's financial market - climbed 1.44% on speculation that U.S. interest rates may have peaked, with Brent trading at $87.09 a barrel at 1230 GMT.
The Qatari index (.QSI) was up for a third straight session, advancing 1% as most of its stocks rose. Qatar Islamic Bank (QISB.QA) surged 1.7% and Industries Qatar (IQCD.QA) climbed 1.1%.
Qatar National Bank (QNB) (QNBK.QA), the biggest Gulf bank by assets, gained 0.7%.
Saudi Arabia's benchmark index (.TASI) edged up 0.1%, supported by gains in most sectors, with oil major Saudi Aramco (2222.SE) adding 0.5% and Company for Cooperative Insurance (8010.SE) surging 3.7%.
Dubai's benchmark index (.DFMGI) ended 0.6% lower, dragged down by losses in all sectors with Emaar Properties (EMAR.DU) dropping 1.4% and Tecom Group (TECOM.DU) sliding 1.8%.
In Abu Dhabi, the benchmark index (.FTFADGI) was down 0.6, with Multiply Group (MULTIPLY.AD) falling 1.8% and conglomerate Alpha Dhabi (ALPHADHABI.AD) declining 1.5%.
Outside the Gulf, Egypt's blue-chip index (.EGX30) rose 1.7%, lifted by a 7.8% climb in El Sewedy Electric Co (SWDY.CA) and a 16% surge in Alexandria Container and Cargo Handling Company (ALCN.CA).
Meanwhile, investors continued to monitor developments in the conflict in the Middle East, with Israel's military saying there would be no humanitarian exceptions to its siege of the Gaza Strip until all its hostages were freed.
Dubai’s Record Rental Surge Is Slowly Starting to Moderate - Bloomberg
After more than two years of soaring rents, there’s finally some good news for tenants in Dubai.
While rents continue to increase at eye-popping levels, the rate of the surge is finally moderating in some of the city’s most popular neighborhoods, according to CBRE Group Inc. Rents had climbed to record rates following an influx of newcomers to the Middle Eastern financial and business hub.
The average rental rate climbed 20.6% in the year through September, slightly lower than the 21.7% growth registered a month earlier, according to the real estate adviser. Over this period, the average leases for apartments and villas rose 20.7% and 20.1%, respectively.
In September, the average annual rent for a villa reached a record 322,750 dirhams ($87,870), and while those prices are likely to climb further due to limited supply, they’re not expected to rise as quickly as they have been, according to Taimur Khan, CBRE’s head of research. That’s mostly due to tenants dodging price increases by moving to the edge of the city or fighting eviction notices in court, he said.
Major Gulf markets in the red ahead of US inflation data | Reuters
Major stock markets in the Gulf fell in early trade on Thursday as investors were cautious ahead of a key U.S. inflation report that could offer more clues about the Federal Reserve's monetary policy.
Markets are waiting for U.S. inflation data for September due later in the day to see if the Federal Reserve's interest rate campaign has had the desired effect on the economy and for further clues on the trajectory of interest rates.
Monetary policy in the six-member Gulf Cooperation Council (GCC) is usually guided by Fed policy decisions because most regional currencies are pegged to the U.S. dollar.
Saudi Arabia's benchmark stock index (.TASI) slipped 0.8%, dragged down by losses in all sectors with Lumi Rental (4262.SE) falling 1.8% and the kingdom's largest lender Saudi National Bank (1180.SE) declining 1.3%.
Dubai's benchmark stock index (.DFMGI) fell 0.3% in early trade with Emaar Properties (EMAR.DU) losing 0.5% and Dubai Electricity and Water Authority (DEWAA.DU) slipping 1.2%.
In Abu Dhabi, the benchmark stock index (.FTFADGI) was down 0.1%, weighed down by a 1% drop in Alpha Dhabi Holding (ALPHADHABI.AD) and 1.2% decline in Aldar Properties(ALDAR.AD).
The Qatari benchmark index (.QSI) rose 0.5% with all sectors in the green, supported by 1.4% gain in Industries Qatar (IQCD.QA) and 1.4% rise in Dukhan Bank (DUBK.QA).
Meanwhile, investors continued to monitor developments on the conflict in Middle East with Israel's military saying on Thursday it conducted a "large-scale strike" in Gaza overnight, targeting an elite Hamas unit that led the deadly weekend attacks.
Saudi energy minister: we need to be proactive on oil market | Reuters
Saudi Energy Minister Prince Abdulaziz bin Salman said in a Russian TV interview that it was necessary to be "proactive" on the oil market and attempt to bring stability to it, while adding that oil producers do not target prices.
He said in the interview, conducted on Wednesday and aired on Thursday, that the market was unpredictable and "cannot be left on its own".
"We are not magicians, it is hard to forecast what will happen on the market even in half a year," he told Rossiya-24 state TV.
Saudi Arabia and Russia have agreed to continue with voluntary oil supply cuts of a combined 1.3 million barrels of oil per day, or more than 1% of global demand, to the end of the year.
The Saudi minister said the need to act on the oil market depended on its volatility. He also said, however, that attempts to target prices had failed in the 1980s.
Russian Deputy Prime Minister Alexander Novak, speaking in the same interview, said Russia's deal with OPEC+ had had a stabilising effect.
