Most Gulf stock markets closed lower on Wednesday, in line with global shares after an overnight tech-led sell-off on Wall Street put the spotlight on stretched valuations.
Stocks are retreating from record highs on fears equity markets may have become overstretched after the CEOs of Wall Street heavyweights Morgan Stanley and Goldman Sachs questioned whether sky-high valuations can be sustained.
Saudi Arabia’s benchmark index declined 1.2%, falling for a fifth consecutive session, hit by a 0.6% fall in Al Rajhi Bank and a 2% tumble in Alinma Bank as the lender traded ex-dividend.
Elsewhere, utility firm Saudi Electricity Co plunged 8% – its biggest intraday fall since March 2022 – following a decline in quarterly net profit.
The headwinds from Wall Street’s elevated valuations may spill over into the Saudi market.
Despite Aramco’s solid earnings and oil prices holding around the mid $60s per barrel, the latest global equity sell-off has exposed a latent sensitivity to high valuation levels that have gone untested for some time, said Ahmad Assiri, research strategist at Pepperstone.
“This recent downswing, the steepest since early October, could translate into mild selling pressure on (Saudi stocks) due to the overall correlation between global equity markets.”
Most Gulf markets in red on weak oil, Fed rate outlook
However, Savola Group advanced 3.7%, after the kingdom’s largest food products company posted a 113% rise in third-quarter profit.
Perfect Presentation For Commercial Services (2P) jumped 6.2% to be the top gainer on the index after its shareholders greenlit a 10% capital hike, increasing the firm’s capital to 330 million riyals ($87.99 million).
In Abu Dhabi, the index dropped 0.4%, with ADNOC Drilling losing 1.3%, as the firm traded ex-dividend.
Meanwhile, ADNOC Drilling has signed a definitive deal to acquire an 80% stake in MB Petroleum Services for an enterprise value of $204 million.
Dubai’s main share index fell 0.3%.
Outside the Gulf, Egypt’s blue-chip index edged 0.2% higher, hitting an all-time high, led by a 5.7% leap in Talaat Moustafa Group , rising for a fourth consecutive session.
On Monday, the firm’s unit launched the development of a new integrated tourism project with an anticipated investment of $788 million.
The Egyptian market remains on a solid and healthy trajectory, backed by favorable corporate and macroeconomic developments and a generally better outlook, said Milad Azar Market analyst at XTB MENA.
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Saudi Arabia dropped 1.2% to 11,257
Abu Dhabi fell 0.4% to 10,015
Dubai eased 0.3% to 5,992
Qatar was down 0.2% to 11,007
Egypt rose 0.2% to 39,132
Bahrain added 0.1% to 2,080
Oman declined 0.9% to 5,566
Kuwait retreated 0.5% to 9,462
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