TASI falls 1% as NCB slumps; ENBD drags down Dubai

Gulf stocks declined on Monday, led by Saudi Arabia and Dubai, as troubles of the Turkish Lira weighed down stocks that have exposure to companies in Turkey.

Saudi Arabia’s Tadawul All Share Index (TASI) slipped below 8,000 points in early trade as a number of heavyweight banks declined, led by National Commercial Bank (NCB).

The benchmark index was last trading down 1 percent at 7,981 points, with 142 decliners against 24 firms nudging higher.

“At this time, any exposure to the Turkish Lira will result in downwards pressure, especially on Asian and European equities,” Issam Kassabieh, senior financial analyst at Menacorp, told Argaam.

“When it comes to Saudi and UAE indices it is a different story because the exposure is limited to a few stocks,” he said.

However, the companies that have interests in Turkey are mainly heavyweight stocks, which pull down the main index as they fall, Kassabieh added. “This doesn’t mean that the market as a whole is reacting (to the drop in Lira).”

NCB slumped 2.7 percent to SAR 41.65. The blue chip bank owns a 67.03 percent stake in Türkiye Finans Katılım Bankası.

Al Rajhi was last lower by 1.2 percent and Samba fell nearly 2 percent.

Petrochemicals major SABIC, which owns a 100 percent of SABIC Petrokimya’s shares, was down nearly 1 percent at SAR 125.

In Dubai, the main index was last trading lower by 1.2 percent at 2,854 points as banking giant Emirates NBD plunged 4.4 percent to AED 9.4.

“The sharp drop in the Dubai Index is definitely related to Emirates NBD and its exposure in Denizbank,” Kassabieh said.

ENBD has not mentioned any cautionary measures or clauses that would protect it from the devaluation of the Lira, he added.

“The deal states the fixed price is in USD which means it will be cheaper to acquire but keep in mind that Denizbank’s capital has eroded as the dollar became worth more than 7 liras,” Kassabieh said.

“This means ENBD’s CAR ratio will be weighed down if the acquisition goes through and could need a capital increase to lift it back up.”

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com