MIDEAST STOCKS-Saudi stock index slips to 8-month low amid slowing economy
By Maqsood Alam
Sept 11 (Reuters) - Saudi Arabia's stock market fell to an eight-month low on Wednesday as a slowing economy prompted investors to pull most shares down from lofty valuations.
The Saudi index .TASI closed 1.4% down with 163 of its stocks falling and 19 rising.
Blue-chip stocks were the biggest drag on the index. Lenders National Commercial Bank 1180.SE and Al Rajhi Bank 1120.SE shed 2.7% and 1.2% respectively, while petrochemical maker Saudi Basic Industries 2010.SE lost 2.2%.
The index fell as much as 2.5% during the session, wiping out all its gains this year before clawing back some losses to close just 0.4% up year-to-date.
The market had jumped as much as 20% between January and May, led by foreign investors who have been net buyers every month this year as Saudi stocks joined the MSCI and FTSE Russell emerging market indexes.
The move onto the indexes caused the stocks to become over-valued, with the kingdom's slowing economy teetering on the brink of contraction
"Saudi Tadawul has lost more than 15% since May," said Vrajesh Bhandari, Senior Portfolio Manager at Al Mal Capital. "Valuations were expensive and fundamentals have caught up now. However, even with this we do not see value in large caps and therefore expect more downside."
"Investors need to be selective and we find interesting ideas within the midcap space," added Bhandari. "One area to have a close eye on is Government project spending on infrastructure and how much that translates into loan growth for banks."
Dubai's index .DFMGI was down 0.3% with Dubai's largest listed developer Emaar Properties EMAR.DU dropping 0.8%.
Qatar's index .QSI rose 0.9% extending its gains for the fourth day, in a boost led by financial shares with Gulf's biggest lender Qatar National Bank QNBK.QA advancing 1%.
In Abu Dhabi, the index .ADI was up 0.2% lifted by 0.4% gain in market heavy-weight First Abu Dhabi Bank FAB.AD.
Egypt's index .EGX30 closed 0.4% higher. Eastern Co EAST.CA gained 3.6% after the cigarette maker's board proposed an annual dividend of one Egyptian pound per share.
The market also received support from a decline in the country's annual urban consumer-price inflation rate to 7.5% in August, the lowest rate in years. The fall cleared the way for further rate cuts by the central bank, which delivered a rate cut in August.
The index .TASI dropped 1.4% to 7,855 points
The index .ADI was up 0.2% to 5,106 points
The index .DFMGI was down 0.3% to 2,885 points
The index .QSI gained 0.9% to 10,466 points
The index .EGX30 rose 0.4% to 15,015 points
The index .BAX was down 0.5% at 1,541 points
The index .MSI gained 0.5% to 4,017 points
The index .BKP lost 2.5% to 6,261 points
(Reporting by Maqsood Alam in Bengaluru, Editing by William Maclean)