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Gulf States – most markets fall as investors sell up after rally

Posted on: April 8, 2009


Reuters – Wednesday, April 8

By Matt Smith

Dubai, April 7 – Four of the seven Gulf Arab markets retreated on Tuesday as investors booked profits from a rally which has taken stocks to highs of up to three months.

The regional markets climbed by between 2 and 16 percent over the preceding three weeks, with rising investor risk appetite swelling trading volumes to send stocks soaring.

Such a rise was always going to provoke some profit-taking after the markets each fell by more than 40 percent from the end of 2007, analysts say, and they were encouraged by the limited scale of Tuesday’s losses.

The Dubai benchmark’s 1.5 percent decline was the largest reverse, with the Abu Dhabi, Saudi Arabia and Qatar indexes all falling by less than one percent. Kuwait’s measure and the little-traded Oman and Bahrain markets all added 0.9 percent.

“We’re locking in most of the gains from the rally and that will keep strengthening the uptrend, but the battering that stocks took in the second half of 2008 won’t be easily forgotten and investors will worry whenever the market falls,” said Mohammed Ali Yasin, Shuaa Securities chief executive.

He said the markets’ slide was likely to be temporary, with imminent first-quarter results expected to show a quarter-on-quarter improvement to boost stock prices.

“I’m cautiously optimistic about the Q1 figures, but people shouldn’t start thinking the crisis is over — all we are doing is rebounding from excessive lows that weren’t justified by company results,” added Yasin.

Analysts forecast the Gulf exchanges will slide further on Wednesday, although much will depend on how global exchanges fare overnight.

The Gulf markets are highly correlated at present, both to each other and global exchanges, but they will move more independently once first quarter figures are released to give investors some firm news to trade on, said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co.

Shuaa Securities’ Yasin agreed, saying the positive correlation with international markets would wane in the medium term.

“People should look at the local fundamentals when making investment decisions and local factors will drive the market momentum going forward,” added Yasin.

Meanwhile, Kuwait’s index beat expectations to post a sixth successive rise as volumes hit a new two-year high for the second day running.

The benchmark has surged 8 percent since the government approved a $5 billion rescue package for the country’s troubled financial sector on March 26.

“Retail investors are driving trading. They’re moving out of the blue chips, especially the banks, and moving into smaller cap stocks, which they believe will post better first quarter results,” said Talal Tawari, Gulf Investment Corp head of GCC equity division.

HIGHLIGHTS OF TUESDAY’S TRADING

SAUDI ARABIA

* The benchmark <.TASI> closed lower for the first session in six, falling 0.6 percent to 5,053 points.

* The four largest firms all decline. Market bellwether Saudi Basic Industries Corp <2010.SE> fell 2.8 percent and Saudi Electricity Co <5110.SE> plunged 8.7 percent.

ABU DHABI

* The index <.ADI> slipped 0.9 percent to 2,532 points as Aldar Properties <ALDR.AD> and Sorouh Real Estate <SOR.AD> fell 3.2 and 4.2 percent respectively.

* Banks and telecoms also toiled. National Bank of Abu Dhabi <NBAD.AD> and market leader Emirates Telecommunications Corp <ETEL.AD> both slipped 1.5 percent, while First Gulf Bank <FGB.AD> was down 2.5 percent.

DUBAI

* The index <.DFMGI> fell 1.5 points to 1,597 points, its fifth reverse in seven sessions.

* Emaar Properties <EMAR.DU> lost 2.4 percent and Emirates NBD <ENBD.DU> dropped 2.8 percent. Losers outnumbered gainers by seven to one.

KUWAIT

* The index <.KWSE> closed up for a sixth successive session, rising 0.9 percent to 7,300 points.

* Tuesday’s trading volume of 922 million shares is a fresh two year high.

* Abyaar Real Estate Development Co <ABYR.KW> jumped 9.6 percent.

QATAR

*The index <.QSI> fell for the first time in four sessions, dropping 0.5 percent to 5,141 points as nine of its 10 largest stocks retreated.

* Market leader Industries Qatar <IQCD.QA> edged up 0.4 percent to help limit the index losses. The other blue chips endured minor losses, with Qatar International Islamic Bank <QIIB.QA> taking the biggest tumble after it fell 2 percent.

OMAN

* The Muscat benchmark <.MSI> increased for a fourth successive session, climbing 0.9 percent to 4,800 points.

* Oman Telecommunications co <OTL.OM> climbed 3.8 percent, while Galfar Engineering <GECS.OM> rose 6.1 percent after HSBC raises its price target for the stock. “Galfar is a leader in shaping sentiment and so it boosted the rest of the market,” said Adel Nasr, United Securities brokerage manager. “I see the index moving up 5 to 10 percent in the next couple of weeks, providing global sentiment remains positive.” [ID:nWNAB1269]

BAHRAIN

* The Bahrain index <.BAX> increased for a sixth session running, climbing 0.9 percent to a seven week high of 1,624 points.

* Ithmaar Bank <ITHMR.BH> added 2.2 percent and accounted for a third of all shares traded on the index.

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