Saudi Arabia’s petrochemical companies are expected to disappoint in the third quarter after crude prices fell 15 per cent over the same period, analysts say.
“The only sector where we could have some negative surprises is petrochemicals, because they took a hit with the fall of oil prices in the quarter,” said Sebastien Henin, the head of asset management at The National Investor, an Abu Dhabi-based investment bank.
Petrochemical prices are closely linked to prevailing oil prices because naphtha, a common feedstock, closely tracks the price of crude.
Saudi Arabia is the biggest producer in Opec and its petrochemicals sector has the biggest representation on the kingdom’s stock exchange.
Energy firms are forecast to report 3 per cent growth in net earnings, according to the regional brokerage house Mubasher. Brent has declined to US$94.67 from $112.29 in the three months ended September 30.
The results should trigger profit- taking as companies such as Sabic, the world’s biggest petrochemicals maker by market value, have performed extremely well of late, Mr Henin said. Shares of Sabic rallied 17 per cent from July 21 to September 9, he added.
Weighed by petrochemicals, Saudi Arabia’s companies are expected to register 5 per cent growth in profits to 25.5 billion riyals (Dh24.97bn), Mubasher wrote yesterday. The financial and healthcare sectors are expected to register growth of 16 per cent, it added.
Saudi Arabia’s stocks tumbled 6.5 per cent on Sunday, tracking global markets, after the IMF projected slower growth next year and after Germany reported sluggish export data, sparking concerns over the euro-zone economy. Shares rebounded yesterday, with the Tadawul All Share Index closing 2.2 per cent higher at 10,377.94.
The kingdom’s equity benchmark has surged 21.5 per cent so far this year, hitting a high of 11,149.26 on September 9 after the country’s cabinet approved laws to allow foreign investors to buy stocks directly from the market. Currently, foreigners can only buy shares of Saudi companies through vanilla swaps or exchange traded funds.
But the latest data on foreign ownership signalled that investors were net sellers in Saudi Arabia, yet net buyers across the region’s other bourses.
The Tadawul had net outflows of $109 million last month, compared with Abu Dhabi, Dubai, Egypt, Kuwait, Oman and Qatar, which enjoyed a combined net inflow of $570m.
The largest net buying by foreigners last month was in Abu Dhabi and Dubai, with 22 per cent and 46 per cent of cumulative net inflows, Mubasher said.
halsayegh@thenational.ae
