Mideast stocks: Saudi index slips, Telecom Egypt drops on MSCI exclusion

Reuters Updated - January 23, 2018 at 09:46 PM.

Saudi Arabia’s stock market slipped in early trade on Wednesday despite firmer oil prices, while Telecom Egypt weighed on the Cairo bourse after index compiler MSCI dropped it from its emerging markets benchmark.

Brent crude traded above $67 per barrel on Wednesday after jumping 3 per cent in the previous session, supported by bets that US crude stockpiles would fall for a second straight week as production slows.

Strong oil helped petrochemicals giant Saudi Basic Industries rise 1.4 per cent and supported other Saudi stocks in the sector.

But the main Saudi index slipped 0.1 per cent as other heavyweights pulled back, such as National Commercial Bank and Jabal Omar, down 1.1 and 0.5 per cent, respectively.

Al Tayyar Travel Group rose 0.4 per cent after MSCI late on Tuesday had included the stock in its standalone Saudi Arabia index. All other 18 index components had already been included in a provisional index published earlier.

Since Saudi Arabia is not yet part of the emerging market universe, significant inflows of passive funds into its stocks are not expected for now, even after the market opens to direct foreign investment on June 15.

The kingdom’s regulator suspended trading in the shares of telecommunications operator Mobily for two hours, giving it time to clarify information related to one of its businesses.

It did not say what particular news required clarification, but the Wall Street Journal reported on Tuesday, citing unnamed sources, that Mobily planned to sell its telecommunications towers portfolio for up to $2 billion.

Egypt's bourse edged down 0.2 per cent and Telecom Egypt, down 3.6 percent, was the main drag. MSCI excluded the stock from its emerging markets index, which is likely to lead to fund outflows when the changes take effect at the end of this month.

Commercial International Bank, whose weighting in the Egyptian portion of the index is set to increase because of Telecom Egypt’s exclusion, edged up 0.4 per cent.

However, according to brokerage VTB Capital, the stock may also see slight outflows because MSCI reduced its free float factor.

Published on May 13, 2015 10:40