Riyad Bank jumps to four-year high on deal talk, oil drags down Gulf

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The Saudi stock market fell on Tuesday, pressured by sliding oil prices, but Riyad Bank <1010.SE> was one of the top gainers, hitting a four-year high after announcing merger talks with National Commercial Bank <1180.SE>

All major Middle Eastern markets dropped on weak oil prices and tepid global sentiment, with Dubai’s index continuing to hover at a five-year low, weighed down by property stocks.

Oil prices plunged to their lowest level in more than a year on Monday, as fears of an economic slowdown weighed on the market.

The Saudi index <.TASI> was down 1 percent, pressured by its petrochemical shares, with Saudi Basic Industries Corp <2010.SE> losing 2 percent and Saudi Kayan Petrochemical <2350.SE> shedding 2.9 percent.

But Riyad Bank jumped 5.2 percent to its highest level since November 2014, after saying that National Commercial Bank <1180.SE>, the kingdom’s biggest lender by assets has begun discussions to merge with the firm. National Commercial Bank <1180.SE> was down 0.2 percent.

The move comes two months after Saudi British Bank (SABB) <1060.SE> and smaller rival Alawwal Bank <1040.SE> agreed to a binding deal to create Saudi Arabia’s third-biggest lender in the first major tie-up for the country’s banking sector in recent times.

Consolidation has increased in the past two years as profit margins have been squeezed by lower government and consumer spending in the face of weak oil prices.

Arab National Bank <1080.SE> also outperformed the index, rising 4.9 percent after its board recommended a capital increase to 15 billion riyals ($4.00 billion).

The Dubai index <.DFMGI> fell 0.8 percent, a day after slumping to a five-year low. The index is now down 27.6 percent year-to-date. The market has been hit hard by slumping real estate prices in the United Arab Emirates, as well as the economic slowdown in Saudi Arabia.

Emaar Properties <EMAR.DU> was down 2 percent, while Damac Properties <DAMAC.DU> slipped 4.1 percent to all time low since its listing in 2015.

Qatar’s index <.QSI> slipped 1.1 percent with Qatar National Bank <QNBK.QA>, the Middle East and Africa’s largest lender, falling 1.1 percent, and Islamic bank Masraf Al Rayan <MARK.QA> sliding 1.9 percent.

Abu Dhabi’s main index <.ADI> slid 0.9 percent. First Abu Dhabi Bank <FAB.AD>, the largest bank in the United Arab Emirates, declined 1.3 percent, and Emirates Telecommunications Group <ETEL.AD> was down 0.7 percent.

Dana Gas <DANA.AD> shed 0.5 percent in low volume. The company said Goldilocks Investment has increased its holding in the firm to 5.2 percent.

(Reuters)

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