Gulf stock markets diverge, Dubai and Qatar settles to multi-month highs

Stock markets in Dubai and Qatar climbed Monday to multi-month highs but Saudi Arabia was dragged lower by banking shares vulnerable to economic pressures due to low oil prices.

Dubai’s index rose 1.0 percent to end at 3,602 points, just below technical resistance at its April peak of 3,605 points, as trading volume more than doubled from Sunday, a positive technical signal. Any break of resistance would point up to the October peak of 3,740 points.

Emaar Properties added 1.4 percent to 7.44 dirhams, taking its gains over the last week to 7.8 percent. The stock confirmed a break of resistance on the October peak of 7.01 dirhams, triggering a major reverse head & shoulders pattern formed by the highs and lows since August 2015 and pointing up in the very long term to around 9.75 dirhams.

The Gulf’s only listed exchange, Dubai Financial Market , gained 3.8 percent in its heaviest trade since May 3.

But builder Drake & Scull, the most heavily traded stock, dropped 3.7 percent after reporting a second-quarter net loss attributable to owners of the parent of 207.6 million dirhams ($56.6 million), versus a profit of 10.3 million dirhams a year earlier. EFG Hermes had forecast a quarterly loss of 11.4 million dirhams.

In Abu Dhabi, the index climbed 0.7 percent with main support from large-cap bank shares. National Bank of Abu Dhabi and Union National Bank each added 1.2 percent.

Qatar’s index recouped early losses to close 0.7 percent higher at a fresh nine-month peak of 11,128 points as most blue chips gained. Islamic lender Masraf Al Rayan added 1.5 percent and Ooredoo climbed 2.5 percent.

The index is now up 6.6 percent year-to-date as international funds have flowed into Qatari equities. But some shares, such as Qatar National Bank, which edged down 0.2 percent to 158.00 riyals on Monday, are now considered fairly valued. According to Thomson Reuters data, the mean target price of 10 analysts for QNB is 158.71 riyals.

SAUDI ARABIA

In Saudi Arabia, the index failed to hold onto early gains and closed 0.3 percent lower as banking shares weighed on the bourse; heavyweight National Commercial Bank fell 0.5 percent.

Some analysts are concerned about the financial difficulties of major construction firm Saudi Oger, which could pressure suppliers around the sector and the banks which lend to them; financial website Maaal quoted unnamed economists as saying 300 billion riyals ($80 billion) of debt could be vulnerable.

Investors are also concerned by the pressures on liquidity at banks due to low oil prices. After King Salman on Sunday ordered a month’s extra pay for Saudi military and security personnel actively involved in military operations in Yemen, the central bank issued a statement on Monday saying this would not compromise the banking system in any way.

But the petrochemical sector was resilient after this week’s rise in oil prices, with the sub-index adding 0.2 percent as Brent oil futures traded over $47 a barrel.

MONDAY’S HIGHLIGHTS

SAUDI ARABIA

* The index fell 0.3 percent to 6,358 points.

DUBAI

* The index gained 1.0 percent to 3,602 points.

ABU DHABI

* The index rose 0.7 percent to 4,560 points.

QATAR

* The index gained 0.7 percent to 11,128 points.

KUWAIT

* The index edged down 0.1 percent to 5,492 points.

OMAN

* The index edged down 0.1 percent to 5,907 points.

BAHRAIN

* The index added 0.1 percent to 1,159 points.

Source: Reuters