Upbeat results from telco may help the index break out of a narrow trading range
Earnings will continue to dictate Gulf investor sentiment on Wednesday and shares in Qatar's telecommunications operator Ooredoo may gain after it beat analysts' forecasts with a 44 percent jump in quarterly profit.
Ooredoo, formerly known as QTEL, posted a profit of 923 million riyals ($253.5 million) for the second quarter. This was above average estimates of 845.31 million riyals.
Upbeat results from Qatar's third largest listed firm by market value may help the index break out of a narrow trading range since it hit a near five-year high last week. The measure is up 15.7 percent year-to-date.
"Qatar has been and will be a slower growth story than other countries in the Gulf like the UAE," says Amer Khan, fund manager, Shuaa Asset Management.
"A lot of that is because of government infrastructure spending. There is room for growth and clarity, but on a longer horizon." Some investors have complained that the government's progress on major infrastructure projects has been slower than expected.
Technically the Qatar index, which ended Tuesday at 9,667 points, is long-term bullish. It faces minor resistance at last week's peak of 9,695 points, but this month's decisive break of major resistance on the January 2011 high of 9,290 points suggests the market will aim in coming months for the 10,500-point area, the target of a major symmetrical triangle formed by the highs and lows dating back to January 2011.
In the United Arab Emirates, shares in Abu Dhabi Commercial Bank may also see increased buying interest. The lender reported a 25 percent rise in second-quarter net profit on Tuesday to 917 million dirhams ($249.7 million), beating analysts' forecasts of 783.7 million dirhams.
Elsewhere, Kuwait Finance House, the Gulf state's biggest Islamic lender, announced 103 million Kuwaiti dinars ($362 million) of "precautionary provisions" on Tuesday.
The firm's second-quarter net profit rose to 26.8 million dinars, but this was below analysts' forecasts of 30.35 million dinars, and the miss could trigger selling in the stock.
In Saudi Arabia, Sahara Petrochemical Co and Sipchem may attract buying after Sahara said the two firms entered into a non-binding agreement for a potential merger. Although financial terms are not yet known, the companies already have a major common shareholder and investors may hope for synergies from any merger.
Global cues are positive; Chinese shares gained after Beijing pledged to keep economic growth stable in the second half of the year. The dollar meanwhile held onto slight gains as market momentum stalled ahead of the outcome of the U.S. Federal Reserve policy meeting on Wednesday. Brent crude oil held below $107 per barrel on Wednesday.