|02 May, 2019

Mideast Stocks: Qatar hits 3 month high, financials weigh on Abu Dhabi

Emaar Properties gains on unit's project

Image for illustrative purpose only. Investors watch prices on the floor of the Doha Stock Exchange in Doha, Qatar February 20, 2006.

Image for illustrative purpose only. Investors watch prices on the floor of the Doha Stock Exchange in Doha, Qatar February 20, 2006.

REUTERS/Fadi AL-Assaad

Qatar's stock market closed at a three-month high on Thursday, buoyed by drilling rig provider Gulf International Services, while the Abu Dhabi index was pressured by financial shares.

The Qatar index rose 0.8 percent, with Gulf International Services jumping 10 percent after its unit was awarded contracts by Qatar Petroleum to provide six offshore drilling rigs.

Brokerage firm QNB Financial Services raised its rating on the stock to 'outperform' from 'accumulate', citing its ability to secure contracts for six rigs out of a total deal size of eight.

"Our preliminary sense is a material uplift in earnings from 2020 onward and we consequently raise our earnings estimated by an average of 28 percent over 2020-2023," QNB said in a note.

The Abu Dhabi index was down 0.3 percent, with United Arab Bank sliding 4.2 percent and Abu Dhabi Commercial Bank (ADCB) losing 0.5 percent.

United Arab Bank posted a nearly 40 percent drop in its first-quarter net profit, while ADCB began trading on Wednesday as a newly formed entity after completing a three-way merger with Union National Bank and Al Hilal Bank.

Dubai's index added 0.3 percent, helped by a 2.4 percent rise by Emaar Properties  and a 2.9 percent gain in Dubai Investments.

Emaar's unit Emaar Development began a 25 billion dirham ($6.81 billion) coastal building project in Dubai. But the stock fell 4.9 percent as it traded ex-dividend.

"I think Emaar Developments will do better than most real estate developers in Dubai because it has de facto state backing, which makes it harder for the competition," said Khaled Abdel Majeed, Managing Partner at MENA Capital.

The company is facing headwinds from oversupply in its core Dubai market, Majeed said, adding that the valuation is reasonable but macro and political challenges are "significant".

The Saudi Arabian index fell 0.3 percent, with Gulf Union Cooperative Insurance declining 4.8 percent after actuaries recommended an increase in its technical reserves of 27.5 million riyals ($7.33 million).

Market heavyweight Saudi Basic Industries dropped 1.3 percent after HSBC cut its target price and rating on the stock.

Egypt's blue-chip index slid 0.3 percent, as its biggest stocks Eastern Co and Commercial International Banklost 4.2 percent and 0.9 percent, respectively.

On Tuesday, Eastern Co posted a drop in its nine-month net profit.

Kuwait's blue chip index added 1.4 percent, with Mabanee Company and Burgan Bank gaining 3.9 percent and 2.2 percent, respectively. Mabanee posted a 13 percent rise in its first-quarter profit.

($1 = 3.7502 riyals)

(Reporting by Karina Dsouza in Bengaluru Editing by Mark Heinrich) ((Karina.Dsouza@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 80 6749 6373; Reuters Messaging: Reuters Messaging: karina.dsouza@thomsonreuters.com))

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