DUBAI/Doha: UAE benchmarks edged higher yesterday, easing away from seven-week lows, but most Middle East stocks fell, tracking losses on world markets as investors become more risk averse.
Qatari stocks tumbled with analysts looking for reasons for the fall despite some of the listed entities reporting robust financials for 2009.
The main index of Qatar Exchange fell a little over 73 points, or 1.11 percent, to 6,503 despite strong net buying support from local institutional investors.
Stock analyst Bashir Al Kahloot, expressing surprise over the trend, attributed the subdued trading sentiment on the exchange to an 'unexpected' liquidity crunch, which he said could be due to less active participation by retail investors.
It might be that retail investors are finding it hard to access personal loans from banks so they are unable to pump funds into the market, he felt.
Foreign institutional investors chose to book profit yesterday as did small Qatari investors.
Islamic Financial Securities led yesterday's fall with a record 9.57 percent slide. Other losers included Qatar Insruance, Zad and Al Rayyan Bank. The gainers were six and they included Qatar Navigation. Across the globe, investors are becoming cautious as they fret about a monetary squeeze from central banks and the impact of tightening US banking regulations.
Dubai's index rose 0.6 percent, trimming its losses to 13.2 percent this year, and further instability is forecast.
"Earnings season will provide both positive and negative leads, which will keep the market volatile in the short term," said Jithesh Gopi, head of research at SICO investment bank.
"People are aware that the information coming out of Dubai is very much lacking in quality and quantity."
Dubai builder Arabtec rallied, but is down 25 percent since agreeing to sell a majority stake to Aabar Investments through convertible bonds.
Union Properties plunged to a seven-year intraday low, extending losses since Credit Suisse slashed its price target on the developer to near zero.
"Arabtec, which most people thought had sufficient liquidity to survive without a capital increase, is now looking at a 70 percent dilution for a capital injection, said Robert McKinnon, ASAS Capital chief investment officer.
"So it makes you wonder how much of a dilution might be needed at other companies like Union Properties." "That's effectively what the (Credit Suisse) note is saying - the target price may be extreme, but when you look at Union Properties' assets and its liquidity, it needs a capital injection and that would require minority shareholders to take a major hit," McKinnon said.
Saudi Arabia's index slipped to a three-week low. Saudi Basic Industries Corp (SABIC) fell for a second day as investors belatedly reacted to a 10-percent, three-week slide in oil prices.
"Investors are looking at companies' financial statements and trying to see where growth will come and whether petrochemicals prices will hold," said Youssef Kassantini, head of portfolio management at Rasmala Investment Saudi.
Kuwait's Zain fell 5.3 percent, slumping to a 35-week low, weighing on the country's index. "Expectations for Q4 earnings are weighing heavily on Zain and there is some serious selling pressure is coming through," said Shahid Hameed, Global Investment House head of asset management for the Gulf. "Zain is a bellwether stock, so when it comes under pressure, the rest of the market does too."
National Industries Group (NIG) fell 7.5 percent after Moody's Investor Services downgraded the Kuwait firm, maintaining a negative outlook. "NIG is a widely held stock and so its downgrade is having a negative impact on the market," added Hameed.
Egypt's Orascom Telecom fell 3.2 percent after cash-short investors reduced their positions ahead of a planned $800m rights issue.
Highlights
Dubai: The index rose 0.6 percent to 1,565 points.
Abu DhabiI: The benchmark edged up 0.1 percent to 2,602 points.
Saudi Arabia: The measure fell 0.1 percent to 6,253 points.
Egypt: The index rose 0.3 percent to 6,587 points.
Oman: The index climbed 1.2 percent to 6,518 points.
Kuwait: The index slipped 1.3 percent to 6,975 points.
Qatar: The measure fell 1.1 percent to 6,503 points.
Bahrain: The index rose 0.2 percent to 1,474 points.
© The Peninsula 2010
