Wednesday, Jun 01, 2011
Saudi SE 6735.98 +0.04%
Dubai FM 1559.92 +1.58%
Abu Dhabi SM 2639.14 +0.68%
Kuwait SE 6378.20 +0.06%
Doha SM 8375.19 +0.25%
Muscat SM 6007.89 +0.76%
Bahrain SE 1346.66 -0.02%
Cairo SE 5523.36 -1.19%
Amman 2159.83 -0.04%
ICE Brent $/bbl 115.35 +0.49%
Gold $/troy oz 1537.20 +0.01%
Euro-USD 1.44 +0.42%
DJIA 12569.79 +1.03%
By Nikhil Lohade
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Stock markets in the Persian Gulf are seen mixed Wednesday as investors remain cautious on riskier assets amid concerns about the sustainability of the global economic recovery.
The spotlight is likely to be on Dubai-based DP World as the company plans to list its shares on the London Stock Exchange Wednesday in a bid to expand its investor base and boost liquidity.
DP World hopes that by listing shares on the LSE, it will attract a broader range of investors that might help address what it sees as a disconnect between the ports operator's fundamentals and share price, the company's chief executive officer told Zawya Dow Jones.
Asian stock markets were lower Wednesday, as many investors were cautious ahead of key manufacturing data from China, while political woes hurt Tokyo stocks.
Wall Street's solid gains on Tuesday failed to buoy demand in Asia, as many investors were cautious ahead of key manufacturing data in the region.
Dow Jones Industrial Average futures were up 28 points in screen trade.
Oil prices were up Wednesday; crude finished at a three-week high Tuesday after the dollar sank against the euro and a pipeline network serving a key U.S. oil hub was shut down.
Nymex July futures were last up $0.23 at $102.93 a barrel.
U.A.E.: Dubai's market closed 1.6% higher at 1559.92 Tuesday; led by bellwether Emaar Properties, itself up 2.6% at AED3.15.
Arabtec Holding ended up 3.9% at AED1.35. Sico assigned a long-term add rating to Arabtec; raised its target price by 17% to AED1.52 on the contractor's better positioning as a regional player after it trimmed Dubai's contribution in its backlog to 30% in 1Q 2011, from 38% in 1Q 2010.
Drake and Scull International rose 3% to AED1.03. Sico assigned a long-term add rating to DSI; raised its target price by 22% to AED1.22 on diversification from a sluggish Dubai construction market to Abu Dhabi, Qatar and Saudi Arabia.
Listing of DP World shares on the London Stock Exchange is expected to drive only some marginal interest, but it clears the path to an eventual improvement of the free float--the timing of which is solely at the discretion of parent Dubai World, said JP Morgan in a note.
DP World shares are expected to start trading on the LSE Wednesday.
"An event which is likely to broaden the addressable shareholder base and facilitate an eventual sell-down by parent Dubai World [current about 81% equity stake]/improved liquidity." JPM reiterated its overweight recommendation on the stock; target price $15.30. DP world shares closed +0.4% at $13.45.
Abu Dhabi's market finished +0.7% at 2639.14 Tuesday; Taqa shares rose 1.7% to AED1.24 and heavyweight Etisalat was up 0.5% at AED10.30.
SAUDI ARABIA: The Tadawul market ended slightly up at 6735.98 Tuesday; the benchmark index closed higher in four out of the last five sessions.
Petchem stocks led the gains; heavyweight Sabic +0.2% at SAR107.25.
Global equity market and oil price strength provides some support to local sentiment.
Morgan Stanley lowered Maaden to equalweight, from overweight rating previously; while it raised the company's target price to SAR29.60 versus SAR26.90.
"We think that a timely start of DAP output in 3Q 2011 is now in the price, while the volatility of the share might increase during the complex ramp up. With only 7% upside to our new price target, we downgrade to equalweight," MS added.
KUWAIT: The market closed +0.1% at 6378.20 Tuesday; bank stocks were among the top risers.
National Bank of Kuwait rose 1.7% to KWD1.2 and Gulf Bank of Kuwait +3.7% at KWD0.560.
"There is no liquidity in the market as investors remain on the sidelines waiting for some strong news flow to drive trading," said a Kuwait-based trader.
The benchmark index is among the region's worst performers this year, down about 8% to date.
QATAR: Doha's market closed up 0.3% at 8375.19 Tuesday; the benchmark index is down about 4% for the year, after adding 25% in 2010.
Telecoms regulator ictQatar threw out Vodafone Qatar's claim against Qatar Telecom, or Qtel, that the Gulf Arab state's incumbent operator had priced international calls at unfairly low prices, the watchdog said in statement on its website.
Foreign ownership limits for listed companies in Qatar will remain at 25% for this year, a Qatar Exchange spokesman said Tuesday, a decision that could count against a potential upgrade for the Arab country to emerging market status by index compiler MSCI.
"Relaxing the FOL is another condition for MSCI inclusion yet not as critical as the DvP one. We expect the Qatari market to react negatively, as this news will be seen as a set back to the possible MSCI inclusion," said an Abu Dhabi-based trader at CAPM Investment.
BAHRAIN: The main gauge of stocks closed flat at 1346.66 Tuesday; the market is down 65 for the year.
Gulf Finance House said it made a net profit of $11.9 million in the first quarter of 2011, compared to $7.5 million loss for the same period last year.
Bahrain's economy is expected to contract this year as the non-oil sector suffers from a political stand-off, said Bank of America - Merrill Lynch in a note.
"We expect Bahrain's economy to contract by 2.2% this year in real terms, driven by a contraction in the finance, tourism and manufacturing sectors."
BoA-ML said despite likely higher social spending, its oil price forecast is consistent with a small fiscal surplus of 2.7% of GDP in 2011. "On the flip side, we see upside macro risk should the GCC make good on its promise of a $10 billion Marshall plan."
The investment bank noted the government crackdown has likely muted opposition; said the lifting of emergency law suggests the government believes the worst of the unrest is over.
"However, the continued presence of GCC forces and the increase in sectarian tensions suggest that there will be no dialogue with the opposition for now. As such, we still harbour concerns about the medium-term political outlook."
OMAN: Muscat's stock market closed +0.8% at 6007.89 Tuesday; still down about 11% for the year.
The impact of unrest in Oman is expected to be limited and continued expansion in hydrocarbon output is seen driving growth, said Bank of America - Merrill Lynch in a note.
"The Omani Sultan was swifter than many of his counterparts to offer political concessions and contain the spread of protest in the country."
BoA-ML said, on the back of higher hydrocarbon production and robust manufacturing, it estimates GDP growth of 3.7% for this year and 4.6% for 2012.
The investment bank noted oil production has been increasing by 6% year-on-year on average since 2008 and the country is not bound by an OPEC quota.
"Higher oil prices would allow a fiscal surplus in 2011 despite increased transfers; the external debt stock is low and the maturity profile benign."
Bank Muscat shares closed +1.8% at OMR0.725 Tuesday. BoA-ML upgraded Bank Muscat to buy, from neutral rating previously, on the back of its recent underperformance. It raised the company's price objective to OMR0.96 versus OMR0.92.
"Our bullish view on the stock is underpinned by the bank's experienced management, its resilience and benign growth outlook, while being well positioned to benefit from a fall in provisioning in 2H."
EGYPT: The market finished 1.2% lower at 5523.36 Tuesday.
The benchmark index added almost 6% in the previous four sessions, buoyed by news of international aid pledges to the country.
A trader noted profit taking from recent gains; said unrest concerns remain.
Qatar recently pledged to invest at least $10 billion in Egypt; and in a bid to encourage democracy in countries such as Egypt and Tunisia, the G8 on Friday promised a package of $40 billion for Arab countries.
SYRIA: Damascus Securities Exchange, or DSE, trade sessions take place Sundays to Thursdays.
NEWS FROM AROUND THE GULF: Initial price guidance for Emirates Airline's planned U.S. dollar-denominated bond issue has been set at 337.5 basis points over five-year mid swaps, a banker close to the deal said Tuesday. The five-year bond issue is expected to be of benchmark size, the banker said.
The International Monetary Fund on Tuesday revised downward its 2011 forecast for economic growth in oil-rich Saudi Arabia to 6.5% from 7.5%.
Abu Dhabi government-owned International Petroleum Investment Co., or IPIC, said Wednesday it plans to diversify its investment portfolio into new sectors such as agriculture and industrial services in line with the emirate's 2030 economic strategy.
Saudi Arabia-based Arab Petroleum Investments Corp., or Apicorp, said Tuesday its general assembly decided to increase the development bank's subscribed, authorized and paid-up capital as it seeks to position itself for further growth after reporting a record net profit earlier this month.
-By Nikhil Lohade, Dow Jones Newswires, +9714 446 1694, nikhil.lohade@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
01-06-11 0505GMT
