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Sun 29 May 2011 11:20 AM

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Dubai down as locals tire of MSCI play

DFM ends lower for first session in three as local traders grow weary of playing a possible MSCI upgrade

Dubai down as locals tire of MSCI play
(Getty Images)

Dubai's index DFM ended lower for a first session in three
as local traders grew weary of playing a possible MSCI upgrade.

Emaar Properties and Dubai Financial Market (DFM) each dropped
1.6 percent, while telecoms operator du slipped 0.9 percent.

The index fell 0.6 percent to 1,536 points to be within 10
points of Wednesday's two-month low.

"Locals are taking some cash off the table as they wait
to see what happens with MSCI," said Matthew Wakeman, EFG-Hermes managing
director for cash and equity-linked trading.

"Retail investors are getting impatient. They started
playing the MSCI announcement a little bit early, expecting international
investors would follow, but that hasn't happened."

This is spurring some local traders to sell up and reinvest
in other markets such as Egypt.

"There have been some positive developments, with the
exchanges implementing (a new payment system) on time," said Wakeman.
"Now we need to see if brokers are using and how things develop over the
next few weeks with regards to news flow."

On Sunday, the DFM said its brokers and custodians are fully
ready to implement a Deliver Versus Payment (DvP) settlement system. This was a
prerequisite for MSCI to upgrade the UAE to emerging market status and the
index compiler will announce its verdict in June.

"If we get positive news on the upgrade, people will
dive back in," said Wakeman. "It's very much a retail-driven market,
internationals are in wait-and-see mode."

Abu Dhabi's benchmark ADI made its largest gain in four
weeks, rising 0.5 percent to 2,621 points.

Aldar Properties was the most active stock, accounting for
more than a sixth of shares traded as it rose 2.2 percent, while rival Sorouh
Real Estate adds 2.3 percent.

In Kuwait, Zain climbed 4 percent, rebounding from Sunday's
16-month low.

"It's mainly technical - Zain has been sold off along
with the rest of the market, so people have started bottom fishing and Zain is
one of the first names they go for," said Wakeman.

Kuwait's tick sizes - the minimum price movement - are
relatively large, so stock moves tend to be exaggerated, he added.

Kuwait's index KWSE climbed 0.3 percent to 6,375 points.

Qatar's measure QSI fell 0.2 percent to 8,355 points, its
sixth decline in seven sessions.

Foreign and local investors bought Oman bank stocks, helping the country's index MSI edge away from Sunday's 22-month low.

Bank Muscat climbed 1.4 percent, Oman International Bank (OIB) rose 0.4 percent and National Bank of Oman added 1 percent.

"There was buying from foreigners and local institutions, which gave some relief to the market," said Adel Nasr, United Securities brokerage manager.

Foreign funds targeted Bank Muscat and OIB in particular, Nasr said, ahead of conventional banks launching Islamic services.

"This should give them extra business in the coming two to three years," he said.

The index rose 0.2 percent to 5,963 points. Volumes have hit a three-week high.

"I'm still worried about the market - we had a slight rebound today, but volumes were small, although better than we've been used to recently - we will have to wait until later this week to get a clearer outlook," Nasr adds.

Saudi Arabia's index TASI edged up to a fresh four-month high as agriculture and construction stocks supported.

The agriculture and food index rose 0.8 percent and the building and construction benchmark added 1.5 percent.

Domestic demand drive these sectors and so they are often targeted as safe havens when global markets are shaky.

Tabuk Agriculture surged 9.8 percent.

"Bluechips are stable but liquidity is not going to the large cap stocks in Saudi," said a Riyadh-based fund manager on terms of anonymity. "Liquidity is moving from sector to sector - its more speculation with high turnover."

The main index edged up 0.05 percent to 6,755 points, rising for a fourth session to reach its highest close since January 17.


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