Qatar, Egypt Lead Gains; UAE Consolidates

Qatar’s bourse outperformed the region on Wednesday after the country’s top bank reported strong second-quarter results, while United Arab Emirates markets continued to consolidate on declining volumes after a sharp rebound.

The Doha index rose 1.3 percent as most stocks gained. Industries Qatar was the main support, adding 2.3 percent.

Shares in mobile phone operator Ooredoo, which dropped 23 percent last month on profit-taking and concern about the conflict in Iraq, where the company earns a fifth of its revenue, continued to rebound and jumped 3.9 percent.

Qatar National Bank (QNB), the largest lender in the Gulf state, published its second-quarter results on Tuesday, becoming the first local company to do so. Net profit rose 1.5 percent, coming slightly ahead of the expectations of analysts, who had forecast a 2.7 percent decrease.

However, shares in QNB, which had risen 1.7 percent ahead of Tuesday’s earnings report, slipped 0.1 percent on Wednesday.

Investors’ expectations for other stocks are also positive, even though Qatar’s profit growth is expected to lag that of the UAE. Some of the reasons for that are traditionally higher dividend payouts and lower leverage, said Amer Khan, senior executive at Shuaa Asset Management in Dubai.

“There is a level of certainty in cash flows in Qatar that you don’t necessarily find in the UAE because of Qatari companies’ lower leverage,” he said. “The story in Qatar is long-term government spending.”

UAE

Shares in builder Arabtec fell 2.1 percent, after soaring 62 percent in the previous six sessions on what traders said was a flurry of short-covering that has now ended.

The main Dubai index closed flat, however, as lenders Emirates NBD and Dubai Islamic Bank added 2.4 and 1.9 percent respectively.

Shares in port operator DP World fell as much as 3.2 percent in early trade after Djibouti said it had started legal action against the company, seeking to rescind its concession in Africa’s largest container terminal. The company owns one-third of the Doraleh Container Terminal, its annual report says.

However, the stock then recovered and closed flat in thin trade. The Djibouti issue by itself is not expected to have much impact on DP World, which has a portfolio of about 65 terminals across six continents.

Bahrain-based Islamic investment bank Gulf Finance House jumped 3.5 percent after announcing the purchase of 1.2 million square feet of land in the Dubailand district of Dubai. Gulf Finance House did not say how much it had paid for the land plot, where it plans to establish a new mixeduse residential development.

Shares in Gulf Navigation slumped 7.9 percent after the UAE shipper said it had cut its capital by two-thirds and written off accumulated losses worth 1.1 billion dirhams ($300 million), key parts of a turnaround plan designed to solve its debt problems.

Abu Dhabi’s bourse slipped 0.2 percent on the low volumes commonly seen during the holy month of Ramadan, when many retail investors stay away from the market.

“I think the next key market driver (in the UAE) will be second-quarter earnings,” said Khan from Shuaa Capital. Most UAE companies are expected to report their earnings in late July or early August.

EGYPT

The Cairo bourse edged up 0.8 percent, continuing a leg-up initiated by property stocks in the last session. Investors are betting that Egyptians will buy real estate as a hedge against inflation, which is set to accelerate after the government decided to cut fuel subsidies.

Shares in Palm Hills Developments rose 0.5 percent while Medinet Nasr for Housing and Development was up 3.0 percent.

Eastern Tobacco jumped 3.5 percent to 162.00 pounds after local brokerage CI Capital raised its target price for the stock by 16 percent to 255.00 pounds with an “overweight” rating.

WEDNESDAY’S HIGHLIGHTS

DUBAI

* The index was flat at 4,508 points.

ABU DHABI

* The index slipped 0.2 percent to 4,817 points.

QATAR

* The index added 1.3 percent to 12,717 points.

SAUDI ARABIA

* The index edged up 0.1 percent to 9,787 points.

KUWAIT

* The index rose 0.7 percent to 7,053 points.

EGYPT

* The index climbed 0.8 percent to 8,495 points.

BAHRAIN

* The index edged up 0.5 percent to 1,441 points.

OMAN

* The index rose 0.2 percent to 7,152 points.

Source: Reuters