MIDEAST STOCKS-Saudi dips in early trade as investors become skittish

DUBAI – Saudi Arabia’s bourse slid in early trade on Monday, erasing some of the previous session’s rebound as day traders booked quick profits and long-term investors awaited more market stability.

Riyadh’s index dropped 0.8 percent. It rose 2.7 percent on Sunday.

The petrochemical sector, which has recently been the main influence on market direction, was down 0.9 percent.

“The trend remains bearish, trading below the 14-day simple moving average,” said Shiv Prakash, senior research analyst at Abu Dhabi’s NBAD Securities. “Recovery of crude prices is a must for local stock markets to rally.”

Some banks that made gains in Sunday’s rebound have now turned negative.

Al Rajhi Bank was down 0.8 percent after surging 5.9 percent the previous day.

The Islamic lender, which was one of the last banks to report earnings, made a fourth-quarter net profit of 1.95 billion riyals ($519.6 million) beating analyst expectations.

Samba Financial Group, another lender which reported better-than-expected fourth quarter results last week, slid 0.8 percent.

Saudi Arabia’s fourth-quarter earnings season has ended. The combined profits of the kingdom’s listed companies shrunk 16.1 percent from the same period last year, according to Riyadh’s NCB Capital. The firm said results were also 29 percent below analysts’ average forecasts.

Petrochemical companies were the worst performers, while banking and food sectors were the best.

“Although I believe that the markets are in a consolidation phase, long-only managers will only enter the markets when the volatility subsides,” said a Riyadh-based portfolio manager.