Gulf stocks may pull back after oil drops

A retreat in crude oil prices may erase some of Gulf bourses’ recent gains Wednesday, but some stocks may continue to perform well because of strong quarterly earnings.

Brent futures have snapped back 2.5 percent to $42.97 in early Asian trade after Kuwaiti oil workers ended a three-day strike that had cut production in the OPEC member by nearly half.

On Tuesday Gulf stock markets posted solid gains, mainly because of better-than-expected earnings, which helped lift investor sentiment as they suggested some companies were able to adapt swiftly to a wweaker economic environment.

On Wednesday, Saudi Arabia’s top two telecommunications operators may head in opposite directions after reporting divergent results late on Tuesday.

Etihad Etisalat (Mobily) said cost-cutting had helped it swing to a first-quarter profit of 16.6 million riyals ($4.43 million) compared to a loss of 44.5 million riyals in the prior-year first quarter.

Analysts at NCB Capital had forecast it would make a net profit of 201.1 million riyals for the period, but EFG Hermes had expected a net loss of 4.59 million riyals.

Saudi Telecom missed analysts’ forecasts, blaming rising costs for a 5.2 percent fall in net profit. It made a profit of 2.38 billion riyals compared to analysts’ average expected quarterly profit of 2.5 billion riyals.

In Doha, Qatar Gas Transport Co (Nakilat) may find some buying interst after it posted a 7.9 percent rise in first-quarter net profit to 240 million riyals ($65.91 million). One analyst polled by Reuters had forecast Nakilat’s profit would be 234.2 million riyals.

Qatari banks have so far reported strong earnings, with the latest, Qatar Islamic International Bank, posting a 5.1 percent rise in first-quarter earnings to 223.1 million riyals.

Source: Reuters