Investors to focus on earnings

11/07/2010 00:00 AST

Regional markets made sizable gains last week and are expected to attract more attention as second-quarter earnings kick in.

Although UAE bourses made some gains, some brokers argue the markets remain range-bound on low participation.

“Looking at the index in recent weeks, the DFM [Dubai Financial Market General Index] has been trading in a very tight range between 1,460 and 1,500, more or less,” said Hassan el Salah, the head of institutional trading at AlRamz Securities based in Abu Dhabi.

“No one is willing to sell into current prices and any buyer who wants to come into the market needs to pay a premium in order to take quantities.”

Mr el Salah said traders remained very selective because volumes had not trickled down to all stocks on the indexes.

“Only specific names, not everything has gone up with the same percentage points,” he said. “People are taking a look into quality names, where they expect improvement or visibility in the second-quarter earnings. We are limited in terms of what we can buy for value.”

Volumes have bottomed and are expected to improve, albeit by very little.

“There’s still a lack of interest in the market, which is evident in the volumes,” Mr el Salah said. “I don’t expect a drastic improvement but I don’t expect volumes to go any lower than this.”

Volumes traded on the DFM dropped as low as Dh50 million last week. Visibility would be a catalyst to push the markets up, said Mr el Salah.

Nakheel, the Dubai developer, made a payment to the contractor Arabtec Holding late last week.

Arabtec shares rose 1.1 per cent per cent to Dh1.73 on Thursday.

“The market didn’t care, it was already priced in,” Mr el Salah said. “Now investors are looking at its backlog feasibility and its receivables.”

Aabar Investments gave no further updates on its plans to delist from the Abu Dhabi Securities Exchange. Brokers have welcomed the company’s plans to go private.

“Most of Aabar’s traders, not investors, are speculators,” Mr el Salah said. “Institutional investors need to know what the company is doing in order to trade their stock but transparency when it comes to management is not clear”

The Saudi Tadawul All-Share Index rose 2.3 per cent to 6,200.26, yesterday.

Saudi Arabian Fertiliser Company (SAFCO), reported a net profit of 907m riyals for the second quarter, almost double the 480m profit for the same quarter last year.

Ahmed al Qahtani, an analyst at NCB Capital, said the results were in line with expectations.

SAFCO announced on July 3 that it would distribute a dividend of 6 riyals a share.

Bank Riyad reported a net profit of 766m riyals for the second quarter, from 918m riyals for the same period last year.

Saudi Hollandi Bank reported a net profit of 250.5m riyals, from 90.6m riyals last year.

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The National