Cairo shares flat after rate hike; oil dents Saudi
10 Jul 2017 - 0:12
Dubai: Cairo’s stock market showed little reaction yesterday to an unexpected interest rate hike in Egypt, tempered by comments by the deputy finance minister, while a sharp drop in crude oil weighed on Saudi Arabia’s petrochemical sector.
The central bank, faced with accelerating inflation, on Thursday raised rates by 200 basis points for the second policy meeting in a row, wrong footing economists who had forecast no change.
Deputy finance minister Mohamed Meait told Reuters on Saturday the hike was only temporary. Cairo’s blue chip index edged down 0.1 percent, a far milder reaction than the 2.5 percent drop that followed a previous rate hike on May 21.
Analysts at Naeem Brokerage said in a note that the market might witness a slight temporary correction, adding that banks might benefit because they expected higher investment income to offset delinquencies and slower credit growth.
The largest listed lender, Commercial International Bank added 1.4 percent yesterday.
Shares of Advanced Petrochemical , the first Saudi company to report second-quarter earnings, lost 0.7 percent after only a 1 percent year on year increase in second-quarter net profit. Eight of the other 14 listed petrochemical makers declined, helping drag the index 0.5 percent lower.
Riyad Capital expects net earnings for the petrochemicals sector to shrink 13 percent year on year.
“We expect margins to be lower as product spreads continue to weaken while shutdowns could constrain already impacted sector,” it said in a note.
The Abu Dhabi index added 0.3 percent, as shares of Dana Gas, which made up a little half of the total market turnover on Sunday, rebounded 1.5 percent. On Thursday Dana fell 1.4 percent after sources told Reuters that London’s High Court planned to hold a full hearing in September on efforts by the company to restructure $700 million of Islamic bonds.
Shares in Dubai favoured by short-term retail investors were the most active, with builder Arabtec jumping 7.4 percent to 3.47 dirhams.