Gulf stocks extend losses on tanker attacks

The Dubai Financial Market. In the UAE on Sunday, the Dubai and Abu Dhabi indexes fell 0.7 percent and 0.2 percent. (AFP)
Updated 17 June 2019
0

Gulf stocks extend losses on tanker attacks

  • Cautious mood among investors as fears of military confrontation rise

DUBAI: Stock markets in the Gulf extended losses on Sunday reflecting a cautious mood among investors following last week’s oil tanker attacks. 

The attacks on the tankers in the Gulf of Oman on Thursday raised fears of a military confrontation in a vital shipping route for global oil supply and heightened tensions between Iran and the US, which have been in a standoff over Iran’s nuclear program. 

The Saudi index had dropped 1.6 percent on Thursday and fell a further 0.6 percent on Sunday after slight gains in early trade. Most Saudi banks were down, despite Sunday’s announcement by Saudi British Bank that its merger with Alawwal Bank was completed. 

HIGHLIGHTS

• Gulf stocks reverse early gains.

• Gulf of Oman tanker attacks dampen investor mood.

• Saudi banks mostly down despite SABB-Alawwal merger.

The two banks have combined to create the country’s third largest lender, becoming a single listed company after regulatory approvals. SABB’s shares shed 0.1 percent. Alinma Bank, however, gained 0.4 percent, and was one of the stocks registering the highest trading volume on Sunday. 

In the UAE, the Dubai and Abu Dhabi indexes fell 0.7 percent and 0.2 percent, respectively. The Dubai market had risen earlier in the day, boosted by DAMAC Properties and Union Properties, which closed up 2.2 percent and 0.5 percent, respectively. But heavyweight Emaar Properties, the largest developer in the emirate, fell 2.5 percent, weighing on the index. 

Dubai’s telecom operator Du (Emirates Integrated Telecommunications Co) shed 0.4 percent, reversing earlier gains, after it said the UAE sovereign wealth fund Emirates Investment Authority had increased its stake by buying 463.3 million shares from Mamoura Diversified Global Holding and General Investments. 

In Abu Dhabi, blue chip companies Aldar Properties, First Abu Dhabi Bank and Abu Dhabi National Oil Company for Distribution, led losses, dragging down the main index. The other Gulf markets were all in the red, except for the Bahrain index, which rose slightly. 

In Egypt, the index gained 0.2 percent, boosted by a 4.5 percent gain by Pioneers Holding Company for Financial Investments. The company said one of its divisions, Arab Dairy Products, had received a letter of intent from a Netherlands based company about a plan to buy it.


Daimler vows to cut costs after one-offs bring loss

Updated 6 min 7 sec ago
0

Daimler vows to cut costs after one-offs bring loss

  • Company reduced its sales outlook for Mercedes-Benz cars and said €4.2 billion in one-off expenses hit earnings
  • Daimler pledged to cut costs in response but provided few details
FRANKFURT: Luxury carmaker Daimler said it would intensify cost cuts after legal risks for diesel-related issues and the cost of replacing Takata airbags triggered $1.74 billion (€1.56 billion) loss before interest and taxes in the second quarter.
The company reduced its sales outlook for Mercedes-Benz cars and said €4.2 billion in one-off expenses hit earnings, mainly at the cars and vans divisions, contributing to an operating loss at group level, compared with a €2.6 billion profit in the second quarter last year.
“We can’t help but note that this is the lowest level of money in the bank since the depths of the financial crisis,” Bernstein Research analyst Max Warburton said. “Raising Daimler’s operating performance is not going to be a quick fix.”
Daimler pledged to cut costs in response but provided few details under new Chief Executive Ola Kaellenius, who took up the top job two months ago.
“In general, we are intensifying the group-wide performance programs and reviewing our product portfolio in order to safeguard future success,” Kaellenius said on Wednesday.
Rival Aston Martin also announced cost cuts and its shares tumbled after it lowered its outlook for operating profit on slowing demand, while peer Peugeot bucked the industry downturn with a sharp increase in first-half profit.
Daimler will provide details about potential cost cuts and its strategy on November 14 during its capital markets day.
Earlier this month, the Stuttgart-based carmaker had given an initial outline of earnings in what amounted to its fourth profit warning in 13 months, saying its 2019 group EBIT would be “significantly” lower than last year.
The Stuttgart-based carmaker said it now expects unit sales for Mercedes-Benz Cars to be at the prior-year level, revising its previous forecast of achieving a slight increase, following a sharp slowdown in demand in China.
Daimler said on Tuesday that China’s Beijing Automotive Group Co. Ltd. has bought a 5 percent stake in the company, cementing their long-standing alliance.
Unblocking supplier bottlenecks which have delayed production of Mercedes-Benz GLE and GLS models will help push sales of luxury cars in the second half of 2019, Kaellenius said.
“Daimler is blaming supplier bottlenecks and quality issues pretty much across all divisions for its poor financial performance. These are certainly not external factors outside of management’s control,” analysts at Evercore ISI said.
Daimler made a provision of €2.6 billion to cover diesel-related expenses in the first half of 2019 after German regulator KBA ordered a recall of 60,000 Mercedes-Benz GLK models, claiming the vehicles made use of illegal engine software. Daimler has appealed the KBA ruling.
The carmaker declined to break down in detail how much of the amount was allocated for recalls, updates and potential fines and litigation.
Daimler’s diesel pollution levels are being investigated by prosecutors in Stuttgart, Germany, where it is headquartered, as well as by the US Environmental Protection Agency and the California Air Resources Board.
Pressure to clean up combustion engines has come at a time when the industry has to invest heavily in electric and self-driving vehicles, and cope with slowing growth in China, weak markets in Europe and a rise in global trade tensions.
Passenger car sales slowed 3 percent during the quarter and the return on sales at Mercedes-Benz Cars swung to a negative 3 percent in the quarter, down from 8.4 percent in the year-earlier period.