Profit taking sees Saudi market close lower

INVESTORS SELL: Profit-taking has seen Gulf markets fall in the past few days, especially in Saudi. (Getty Images)

Saudi Basic Industries Corp (SABIC) headed losers on the Saudi index as oil prices continued to slide.

Stocks in the world's largest oil exporter have soared in recent months, with the country's benchmark climbing 48 percent in the 10 weeks to Saturday's close, but investors are now selling amid rising risk aversion globally.

"There has been a fundamental improvement in Gulf economies, but there are concerns that stock prices have run ahead of themselves and the question is whether this improvement justifies the bounce in equity markets," said Robert McKinnon, Al Mal Capital managing director of equity research.

SABIC fell 3.1 percent and Al Rajhi Bank - the kingdom's largest listed lender - dropped 2.2 percent as losers outnumbered gainers by five to one.

The index fell 2.4 percent to 5,771 points, its largest one-day reverse for eight sessions.

Oil fell below $61 a barrel on Tuesday, although it picked up from intraday lows after Saudi Arabia said demand was increasing.

"Oil is more significant in Saudi Arabia, especially because of the index weighting for SABIC," said McKinnon.

Shuaa Capital ended 14.6 percent higher after the company said it was considering buying back a AED1.5bn ($408.5m) convertible bond.

Dubai Financial Market climbed 6.6 percent, helping the Dubai index close higher, rising 1.2 percent to 1,730 points.

"It seems investors are targeting blue chips on a daily basis - on Sunday, it was Emaar and today it's Dubai Financial Market," said Ayman el-Saheb, Darahem Financial Brokerage director of operations.

Emaar Properties climbed one percent. It fell on Monday, following double digit gains the day before.

"Both Emaar and DFM saw late selling pressure followed by further buying to take the stocks higher at the close and this could bode well for tomorrow's trading," said Saheb.

The Abu Dhabi index ended lower for a second day, falling 0.5 percent to 2,610 points.

National Bank of Abu Dhabi and First Gulf Bank both declined by more than two percent.

Qatar's index ended lower for a third day, suffering its largest one-day decline for five weeks.

The benchmark fell 2.9 percent to 6,545 points, taking its losses to 3.9 percent since hitting a 20-week closing high on Thursday.

Nineteen of the index's 20 stocks declined, with one unchanged.

Barwa Real Estate fell 4.7 percent and Industries Qatar dropped 2.9 percent.

"The markets' relief rally was based on less-bad news and is starting to lose its legs," said Robert McKinnon, Al Mal Capital managing director of equity research.

"The next rally will have to come from underlying fundamental good data. If it's entering a period of attrition, with bad data lingering, then I think we will see a correction in Gulf markets over the summer months."

Shuaa Capital ended 14.6 percent higher after the company said it was considering buying back a 1.5 billion dirham ($408.5 million) convertible bond.

Dubai Financial Market climbed 6.6 percent, helping the Dubai index close higher, rising 1.2 percent to 1,730 points.

"It seems investors are targeting blue chips on a daily basis - on Sunday, it was Emaar and today it's Dubai Financial Market," said Ayman el-Saheb, Darahem Financial Brokerage director of operations.

Emaar Properties rose 1 percent. It fell on Monday, following double digit gains the day before.

"Both Emaar and DFM saw late selling pressure followed by further buying to take the stocks higher at the close and this could bode well for tomorrow's trading," added Saheb.

The Abu Dhabi index ended lower for a second day, falling 0.5 percent to 2,610 points.

National Bank of Abu Dhabi and First Gulf Bank both declined by more than two percent.

The Kuwait benchmark climbed 0.5 percent to 7,922 points, its highest close of 2009, while volumes slump 13 percent.

Mobile Telecommunications Co (Zain) jumped 5.9 percent and National Bank of Kuwait rose 3.5 percent.

The Bahrain index closed higher for the third session in four, rising 0.2 percent to 1,632 point

Bank Muscat fell 3.6 percent to drag the Oman index to its first decline in four sessions as volumes dropped by more than a third from the day before.

The benchmark ended 1 percent lower at 5,498 points. Oman Telecommunications (Omantel) slipped 1.6 percent.

Omantel and Bank Muscat will both have weightings slashed on the Oman index from July 1 and so institutional investors have been adjusting their portfolios accordingly, pressuring their respective stock prices. (Reuters)

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