Saudi Arabia's stock market rose moderately on Wednesday, lifted by its banking shares following index provider MSCI's decision to include multiple lenders, while Dubai was pressured by a string of disappointing corporate earnings.
Saudi Arabia's index increased 1.3% with Al Rajhi Bank gaining 2.1% and Alinma Bank1150.SE rising 2.6%, while National Commercial Bank 1180.SE was up 0.9%.
"And therefore, we are seeing interest in these names before the MSCI inclusion gets effected later this month (potentially) driving in $7 billion to the market. Having said that, investors need to have a close eye on geo-political factors."
The index fell as much as 2.1% on Tuesday after drone attacks but recovered to close 0.1% higher. Saudi Arabia said drones had struck oil pumping stations two days after its oil tankers were sabotaged off the coast of the United Arab Emirates.
"With rising tensions between Iran and the U.S., and with significant naval build-up in the region, markets are sensitive to news and can be tipped by the smallest signs of a conflict," said Mihir Kapadia, chief executive officer of Sun Global Investments.
In Dubai, the index closed 1.1% lower with real estate firm Emaar Properties dropping 2.3%.
Arabtec Holding plunged 7%, its biggest intraday loss since mid-November, as its first-quarter profit halved to 31.8 million dirhams ($8.66 million) from 63.6 million dirhams the year before.
DAMAC Properties lost 2.9% after it posted a 94% drop in its first-quarter net profit. A slump in the Dubai property market hurt the company, which reported its smallest net profit since going public in 2015.
Amusement park operator DXB Entertainment declined 5.1% on a wider first-quarter loss.
Its aim to reach an EBITDA break-even by the second half of 2020 was challenging, considering weak first-quarter revenue growth and footfall, Arqaam Capital said in a note.
Egypt's blue-chip index, declined 1.5% with El Sewedy Electric shedding 3.5% and Eastern Company was down 1.5%.
The Abu Dhabi index fell 0.5%, led by a 0.6% fall in First Abu Dhabi Bank (FAB).
Index provider MSCI decided against increasing FAB's foreign inclusion factor, despite the lender raising its foreign ownership limit to 40% from 25%.
Aldar Properties dipped 2.3% after the realtor reported a drop in its first-quarter profit.
Qatar's blue chip index added 0.7% with Mesaieed Petrochemical soaring 9.5%, to reach its highest in nearly four years.
On Tueday, MSCI included Mesaieed and Qatar Fuel in the index review. Qatar Fuel was down 0.2%.
($1 = 3.6729 UAE dirham)
(Reporting by Ateeq Shariff in Bengaluru; editing by Emelia Sithole-Matarise) ((AteeqUr.Shariff@thomsonreuters.com; +918067497129;))