Bargain hunters lift Saudi index; Oman hits 12-week high

UAE markets end lower in muted activity ahead of expected MSCI decision on status upgrade
Fahd bin Abdullah Al Mubarak will replace Muhammad Al Jasser at the Saudi Arabian Monetary Agency
By Reuters
Wed 14 Dec 2011 10:36 AM

Bargain hunters helped lift Saudi Arabia's index, with petrochemical and agriculture stocks attracting higher liquidity, and the market recovering most of Tuesday's losses.

"Today, most of the reaction is bargain buying," said Farouk Miah, acting head of research at NCB Capital.

"Yesterday, decent quality stocks were sold off based on nothing. Also, there was no bad global news, which helped."

The exchange climbed 0.8 percent to 6,239 points, rising after Tuesday's decline when investors sold off small caps.

Saudi Basic Industries Corp. (SABIC) ended flat. Its chief executive said on Wednesday that demand for basic materials is softening in the last three months of 2011, particularly in emerging economies.

Saudi Arabian Fertilisers gained 1 percent and National Industrialisation rose 0.5 percent. Yamamah Saudi Cement climbed 5 percent.

The market is looking ahead at end-of-year annual results and Miah says sectors with consumer and domestic focus are likely to outperform, highlighting cement, retail and telecommunication sectors.

Some analysts said the market took support from an announcement of the appointment of a new central bank governor in a limited cabinet reshuffle.

Fahd bin Abdullah al-Mubarak, former managing director of Morgan Stanley Saudi Arabia and chairman of the Saudi stock market, has been appointed head of the central bank.

UAE markets ended lower in muted activity ahead of an expected MSCI decision on whether it would upgrade the country to emerging market status, while Oman's rallied to a 12-week high.

Dubai's index declined 0.6 percent to 1,385 points, extending 2011 losses to 15.1 percent.

"An upgrade is not priced in and therefore even if there is a negative reaction or disappointment, it will be for a day or two and shouldn't have a major impact," said Haissam Arabi, chief executive and fund manager at Gulfmena Investments.

"If we do get upgraded however, there will be positive impact so long as global markets are going to give us a chance to rally. We are at their mercy," he adds.

Index compiler MSCI will announce its decision on late Wednesday if it will upgrade UAE and Qatar from frontier market status.

Emaar Properties slipped 1.8 percent, Emirates NBD shedd 0.6 percent and Dubai Financial Market fell 1.4 percent. These stocks are the likely candidate for an upgrade.

Abu Dhabi's index slipped 0.2 percent to 2,443 points, 31 points away from hitting a new March 2009 low.

"There is already a lot of pressure on stocks, and there is a chance it could fall back to previous lows should the (MSCI) decision be negative," said Amer Khan, fund manager, Shuaa Asset Management.

In Oman, the index gained 1.2 percent to 5,273 points, its highest level since Sept. 21.

Oman Telecommunications rose3.1 percent, Bank Muscat gained 1.4 percent and Ahli Bank climbed 2.3 percent.

Analysts said high-yield dividends and attractive valuations are drawing investors. The benchmark is still down 15.3 percent year-to-date.

Elsewhere, Qatar's index and Kuwait's benchmark ended near-flat.

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