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MIDEAST STOCKS-Saudi may stay weak after drop below 200-day average
October 12, 2017 / 5:38 AM / 2 months ago

MIDEAST STOCKS-Saudi may stay weak after drop below 200-day average

DUBAI, Oct 12 (Reuters) - Gulf stock markets may stay supported on Thursday by strong global equities, but Saudi Arabia may remain weak after its technical outlook worsened with a sharp fall on Wednesday.

The main Saudi index sank 2.2 percent to 6,890 points on Wednesday, closing significantly below the 200-day moving average, now at 7,042 points, for the first time since last November. The next, minor support for the index lies at the late June low of 6,788 points.

There was heavy selling in many blue chips but shares in 32 of Saudi Arabia’s 33 listed insurance firms fell on Wednesday because of fears of an industry shakeout caused by a regulatory crackdown. Most stocks in the sector have still retraced only a small fraction of their gains in the last several months.

The central bank is preparing to introduce a new supervisory framework in coming months that will force insurers to boost capital as well as improve internal risk controls, two people with direct knowledge of the matter told Reuters.

Central bank officials “said half of the companies that are here today will not be here”, one of the sources said. “They want stronger companies in the market.”

Elsewhere, Qatar National Bank reported quarterly earnings that came in slightly above forecasts, which may help to ease concern about the impact on Qatari banks of sanctions imposed on Doha by other Arab states.

QNB posted a net profit of 3.60 billion riyals ($989 million) for the three months to Sept. 30, 5.6 percent up from 3.41 billion riyals in the year-ago period. That was above EFG Hermes’ forecast of 3.46 billion riyals and a SICO Bahrain forecast of 3.51 billion.

In Dubai, loss-making retail and restaurant investment firm Marka said shareholders had approved a plan to continue operations; the company plans to exit its underperforming fashion and sports segments and restructure debt. It is not clear whether this will reassure investors in the beaten-down stock, however.

MSCI’s broadest index of Asia-Pacific shares outside Japan has risen to its highest since December 2007 and is up 0.6 percent. Brent oil futures are little changed from Wednesday. (Reporting by Andrew Torchia)

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