Banks, petrochemicals lift Saudi benchmark index

Al Rajhi Bank helped Saudi Arabia's index end higher for a third session in four as investors bought in ahead of fourth-quarter earnings.

Al Rajhi climbed 2.4 percent. The largest listed Saudi lender is forecast to report a 15 percent increase in quarterly profit, according to a Reuters poll.

The banking sector index climbed 0.8 percent to its highest close since Aug 3.

"Saudi banks' credit growth has been very weak over the last 18 months, but has picked up in the past two quarters," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.

"Bank stocks have underperformed the rest of the market, but valuations are good and they are well run with a conservative outlook and strong balance sheets."

Oil price gains lifted petrochemical stocks.

Saudi Basic Industries Corp (SABIC) rose 0.8 percent and Yanbu National Petrochemicals Co (Yansab) added 0.5 percent.

Rising oil prices boosted Saudi petrochemical producers' margins.

The main share index climbed 0.5 percent to 6,477 points.

Emaar Properties and builder Arabtec led gainers as Dubai's index ended higher for a third session in four, but low liquidity meant traders offered little hope of a sustained rebound.

Emaar and Arabtec each climbed 1.2 percent and between them accounted for more than half the 45.5 million shares traded on the index, which rose 0.4 percent to 1,340 points.

The benchmark is within 25 points of December's seven-year low, while Dubai bourse turnover last year was the lowest since at least 2004 and barely a tenth of the 2008 total.

"The UAE markets are range bound - we need to see more liquidity," said Musa Haddad, head of MENA equity desk at National Bank of Abu Dhabi. "Institutions are not yet in the market and it's struggling within the long-term range."

Dubai has supported at 1,320 points, Haddad said.

Abu Dhabi's index ended 0.05 percent higher at 2,362 points, ending a three-session losing streak.

Telecom operator Etisalat, the UAE's largest listed stock, was the main support, rising 0.6 percent, while First Gulf Bank added 1 percent.

Abu Dhabi's next support is at 2,320 points, Haddad said, warning a break below would signal further declines, while resistance comes at 2,420. A break above 2,470 is needed to show the index has reversed its downtrend, he said.

Qatar National Bank (QNB) made its largest decline in more than two years after the lender's proposed dividend disappointed investors.

QNB ended 5.2 percent lower, its biggest drop since December 2009, after saying it wanted to pay a 40 percent cash dividend and issue bonus shares amounting to 10 percent of share capital.

"The market will be disappointed by QNB's dividend and bonus share issue," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.

"QNB's results tend to read across the market and so are dragging other bank stocks down today. Daily trading tends to be retail driven and these investors have seen the proposed dividend and decided to sell."

Qatar Islamic Bank fell 1.4 percent and Commercial Bank of Qatar dropped 1.3 percent.

Doha's index fell 2.1 percent to a six week low of 8,627 points in its largest drop since Aug. 7.

National Bank of Kuwait headed gainers as Kuwait's index eased away from Monday's seven-year low, with the dominant banking sector still expensive despite sustained declines.

NBK climbed 1.8 percent, Gulf Bank rose 1 percent and Al Ahli Bank added 1.6 percent. The bank index gained 0.9 percent, trimming its losses to 9 percent over the past 12 months.

"Kuwait's market is underperforming," said Shahid Hameed, Global Investment House head of asset management for the Gulf region. "The market still has structural issues - banks dominate, plus a couple of telecoms companies and then some others such as Agility and KIPCO.

"The rest are largely real estate and investment companies, which are facing major challenges in terms of profitability and liquidity and many are heavily invested in Dubai real estate, which remains in trouble."

Kuwait banks are exposed to these troubled companies, which limits potential gains in banks' share prices, said Hameed.

"Kuwait banks are also trading at higher multiples than many in Qatar and Saudi Arabia, so why would you buy them?" he said.

"I don't see the Kuwait market dropping sharply from these levels, but it will remain sideways," said Hameed.

The main index climbed 0.5 percent to 5,720 points.

In Oman, Muscat's benchmark fell for a second day since Sunday's four-month high, slipping 0.3 percent to 5,714 points.

"Infrastructure spending by the government should prop up the market as the market follows general economic sentiment," said Joice Mathew, United Securities head of research.

"Index heavyweights are seeing some profit taking because they had a good run up. Investors are waiting for earnings to come out."