01/11/2010 00:00 AST
Gulf markets fell in lacklustre trade yesterday.
The Qatar Exchange’s benchmark index fell 0.1% to 7,796 points.
Dubai’s index dropped 0.7% to 1,765 points. Abu Dhabi’s benchmark eased 0.03% to 2,816 points.
Saudi Arabia’s measure ended flat at 6,354 points.
Kuwait’s index slipped 0.05% to 7,064 points.
Oman’s index dropped 0.4% to 6,553 points. Bahrain’s measure slipped 0.01% to 1,462 points.
Kuwait Finance House ended flat yesterday, having been down 3.3% intraday, after the Islamic lender posted a 23% decline in third-quarter profit.
“KFH’s results were below expectations. We are of the view that this was mainly due to increasing provisions - its operating profitability hasn’t changed and continues to do well,” said Shahid Hameed, Global Investment House head of asset management for the Gulf region.
“KFH’s shares have lagged in the banking rally of the past three to four months on expectations it would underperform in terms of earnings, so the Q3 numbers are largely already priced-in.”
Kuwait’s bank index fell 0.5%, trimming its gains to 33% since July 4.
Saudi Basic Industries Corp (Sabic) climbed 0.5% to a five-month high, but disappointing bank earnings continued to weigh on Saudi Arabia’s index.
Petrochemical product prices are up about 9% in October, said Hesham Tuffaha, Bakheet Investment Group head of research, boosting sector shares.
These have upside potential in the near term, he said, especially with product prices seen rising further if a new quantitative easing programme by the US Federal Reserve meets expectations. This is seen pushing up equity and commodity prices as investors hedge their exposure to a weakening US currency.
The Saudi banking index eased 0.03%, taking its October losses to 4.1%.
Emaar Properties was the main drag, falling 1.5%, as Dubai’s index eased from Thursday’s six-month high. Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain, warned further gains were likely to be limited.
“This is because of the macro situation - real estate stocks are in distress, with huge over-supply in the market, while banks - especially those from Dubai - don’t have any business to do,” said Sarwar.
“So the economic fundamentals remain below average and therefore the gains such as we saw in September are not sustainable, despite attractive valuations.”
Dubai house prices will sink another 11% before bottoming out in 2012, as oversupply delays any hopes of a recovery, a Reuters poll found last week.
Reuters
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