Qatar at 26-month high, World Cup boosts region

07/12/2010 00:00 AST

Qatar Electricity & Water (QEWC) led Doha's index to a new 26-month high yesterday, with investors continuing to buy into its World Cup story as construction-related regional stocks also rose. QEWC climbed 1.2 percent to its highest finish in at least two years. Qatar said it will create 12 air-conditioned outdoor stadiums as part of its winning bid to host the 2022 soccer World Cup, while the country will spend an estimated $100 billion on infrastructure over the next five years.

Qatar will need a lot more power capacity to meets its commitments for the World Cup," said Scott Darling, Nomura analyst. "That power will indirectly come from QEWC, which will have to start building out this new power generation in the next few years, while domestic demand is already pretty robust.

UAE bourses reopened after a four-day break. Builder Arabtec surged 9.1 percent in its biggest gain in eight months and contractor Drake & Scull (DSI) rose 6.5 percent to a 12-month high as traders bet on a Qatar world cup windfall. Both firms are already active in Qatar.

Kuwait was near-flat as traders await a $12 billion Zain stake sale to Abu Dhabi's Etisalat. "We're not seeing a Qatar effect in Kuwait - there's little trading, with just a bit of profit taking," said a Kuwait trader who asked not to be identified. "So much capital is locked up in the Zain deal.

Zain has a market capitalisation of $20.7 billion, so around $9.5 billion is being held by investors waiting for the 46 percent stake sale to be completed. Zain ended flat at 1.420 dinars. Investors were little moved by Securities Group Co saying it now wants to join Zain's selling consortium. The brokerage firm has opposed the structure of deal, while Al-Fawares Holding, which owns 4.5 percent of Zain, last week launched a lawsuit to halt due diligence.

Ultimately people just want to know if the deal will be done or not," said the trader. "Kharafi obviously wants the deal to go through, but other market players don't on the agreed terms - there's a lot of partiality in the deal." Kharafi group, itself a major Zain shareholder, has led the sale, which is priced at 1.700 dinars per share, but will not be done on a pro rata basis. Securities Group fell 5.5 percent.

Egypt's index fell 0.4 percent following the country's disputed parliamentary elections. The National Democratic Party (NDP) crushed the opposition in the final round of elections after the two main opposition parties withdrew, claiming voting was rigged.

They (investors) thought that if the NDP is taking the majority, that's fine, that's stable. But to go into an election and just get all the votes-that's not quite sure what they aim for," said Youssef Kamal of Naeem brokerage. Saudi Arabia's Almarai rose 3.2 percent after the dairy firm made a two-for-one stock split in a move usually taken to boost trading volumes.

People like stock splits in Saudi Arabia-it's a psychological thing, but buyers think the stock is now cheaper," said a Riyadh-based trader who asked not to be identified.

Reuters