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Abu Dhabi, UAEMonday 10 December 2018

Qatar stocks fall to lowest level in over four years 

Banque Saudi Fransi stocks fall on Kingdom Holding deal

Kingdom Holding will acquire a 16.2 per cent stake in Banque Saudi Fransi following an agreement with Credit Agricole. Banque Saudi Fransi
Kingdom Holding will acquire a 16.2 per cent stake in Banque Saudi Fransi following an agreement with Credit Agricole. Banque Saudi Fransi

Qatar's stock market slid to a 52-month closing low on Tuesday as foreign investors sold, while Banque Saudi Fransi fell in Riyadh after France's Credit Agricole agreed to sell a 16.2 per cent stake in it to local investor Kingdom Holding.

The Qatari stock index fell 0.7 per cent to 8,472 points, though it ended off the day's low of 8,390 points as some bank stocks rebounded. Exchange data showed investors from outside the region were again net sellers.

Regional Arab investors sold Qatari stocks as soon as an embargo was imposed on the country on June 5. With no progress made towards a diplomatic solution to the row, other foreign investors have joined them in recent weeks.

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Saudi Arabia's index dropped 0.2 per cent as Saudi Fransi fell 4.2 per cent to 31.60 Saudi riyals and Kingdom jumped 5.1 per cent.

Credit Agricole is selling its stake in Saudi Fransi for 5.76 billion riyals (US$1.54bn), or about 29.5 riyals per share - suggesting a substantial discount to the market.

Under terms of the deal, Credit Agricole may sell another 5 per cent of Saudi Fransi through off-market block trades. A year after the deal, it would be allowed to exit its investment entirely by selling a further 9.9 per cent. That could keep downward pressure on the stock.

"What we would be looking out for is how this change in strategic shareholder will change the management style of the bank," said Shabbir Malik, a bank sector analyst at EFG Hermes. "Kingdom, although it owns a stake in Citi, lacks experience of running a commercial bank in our view."

The French bank had previously said it was looking to divest from Saudi Fransi, and analysts do not see the deal as pointing to more mergers and acquisitions in the sector; shares in other Saudi banks were narrowly mixed on Tuesday.

Dubai's index was almost flat and Abu Dhabi was 0.4 per cent higher as the United Arab Emirates' biggest bank, First Abu Dhabi Bank, rebounded 2.0 per cent. The stock has been in a downtrend since early August.

Egypt's index dropped 0.4 per cent but Egypt Aluminum soared 10 per cent after the company said it was considering whether to expand annual metal production capacity by 250,000 tonnes. Also, the board approved an authorised capital increase to 5 billion Egyptian pounds ($284 million) from 1 billion pounds, and said it would distribute one share for every existing share.