Gulf stock markets were weighed down by weak oil prices on Tuesday as Saudi Arabia pulled back despite hopes for positive news from index compiler MSCI, while Qatar closed at its lowest level since it was hit by a diplomatic crisis early this month. The Saudi stock benchmark Tadawul All Share Index (TASI) dropped 1.3 percent to 6,953 points on Tuesday. MSCI was due after the close on Tuesday to announce whether it will launch a review of Saudi Arabia for possible inclusion in its emerging market index. Inclusion would bring tens of billions of dollars of fresh foreign money. TASI surged 2.4 percent on Monday after Mohammed El-Kuwaiz, vice chairman of the Capital Market Authority, was quoted as saying by ta local newspaper that he expected inclusion by the end of 2018. On Tuesday, the index rose as much as 0.6 percent early on but closed 1.3 percent lower in thin trade. The three top losers were banks which had surged in the past week because of a belief that foreign funds would flow into them in the event of a positive MSCI decision. Saudi British Bank, for example, pulled back 4.7 percent to 24.30 riyals after jumping 14 percent in the past four days. Petrochemical blue chip Saudi Basic Industries, which would be a key Saudi component of MSCI's emerging market index if the upgrade happens, fell 0.8 percent. Though fund managers agree MSCI inclusion would be bullish for the Saudi market, many think fundamentals are not very attractive at present, with valuations significantly above those of the MSCI emerging market average, and Saudi Arabia's introduction of a sales tax looming next year. So the market may have little room to rally in coming months. Elsewhere, Dubai's index fell 0.2 percent to 3,452 points as builder Drake & Scull, the most heavily traded stock, slid 3.0 percent after saying it had obtained regulatory approval to start a capital restructuring after heavy losses. Abu Dhabi's index dropped 0.8 percent to 4,456 points as Dana Gas pulled back 4.4 percent. It had gained 66 percent this month on what some brokers said was buying by a strategic investor; late on Monday Goldilocks Investment Co, part of Abu Dhabi Financial Group, said it had bought 5 percent of the firm. Qatar's index slipped 1.5 percent to 8,934 points, its lowest finish since January 2016. It remains depressed by economic sanctions against Doha announced by Saudi Arabia and other Arab states on June 5, and has now lost 10 percent since then. Kuwait index fell 0.7 percent to 6,783 points. Bahrain index rose 0.2 percent to 1,319 points. Oman index dropped 0.5 percent to 5,195 points. Egypt's index fell 0.7 percent to 13,416 points as Orascom Telecom Media, the most heavily traded stock, plunged 15 percent as it went ex-dividend. — SG/Reuters
