By Matt Smith
Oil prices close on a 14 month high, as Kuwaiti bluechips are 'hammered'.
Dubai led most Middle East markets lower on Monday as investors booked profits from the previous day's two week high and analysts warned further declines are likely, although Saudi Arabia was buoyant as oil prices spiked.
Saudi Basic Industries Corp(SABIC) hit a 14 month closing high after oil prices reached their highest level since late October, helping the index make minor gains for a third day.
Dubai's index fell 2.6 percent, Kuwait's benchmark dropped 1.6 percent in its biggest one day loss for five weeks and Qatar's bourse declined for the fourth session in five. Oman and Bahrain also fell, while Egypt rose.
Haissam Arabi, chief executive and fund manager, Gulfmena Alternative Investments in Dubai, said:"The market had been going up for a few days before the year end so it's natural to see some profit taking."
Emaar Properties fell 3.4 percent ahead of the official opening of Burj Dubai, the world's tallest structure. The firm's shares jumped almost 8 percent the day before, but traders were little moved by the firm saying it would make a 10 percent return on the tower.
Dubai's loss was its largest for nearly two weeks, while Monday's relatively large volume was a worry for some analysts.
Musa Haddad, head of MENA equity desk at National Bank of Abu Dhabi, said: "The market has given a bearish signal - the way it was sold says it is going lower and is still below the 50 day moving average."
He added: "It's mainly speculators - institutions are not in the market, if they were they wouldn't be selling this aggressively. Any rally is an opportunity to sell, not to buy."
In Saudi Arabia, SABIC climbed 3.3 percent after oil surged more than 2 percent intraday to above $81 a barrel, its highest level since Oct. 26.
Rising crude prices give Saudi petrochemical producers an advantage over rival manufacturers from higher tax countries.
The Saudi index climbed 0.8 percent to 6,202 points, though volumes wer below 100 million shares for a fifth session.
NBAD's Haddad, said:"For Saudi Arabia, 6,100 is a very significant level - a break below that could see a fall to 5,800 to 5,900 points."
He added: "The market is moving sideways so it's better to wait for the fourth-quarter figures."
Kuwait's bluechips were hammered. Agility plunged 8.8 percent to a 49 week closing low, while Zain dropped 5.9 percent. The latter has now fallen 30 percent since Sept 8, the day major shareholder the Kharafi group said it had agreed a deal to sell a 46 percent stake in the telecoms operator.
"We were told the takeover would take four months, so most expectations are that the deal will now not take place," said Naser al Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait.
More than 30 Kuwait stocks fell more than 5 percent in a broad-based sell off.
Nasfi added: "On the last two days of the year, investors pushed the market up above 7,000 points, now it's the New Year prices are correcting from these artificial levels."
"After every quarter and especially the end of year, investors try to push up prices to increase the value of their portfolios." (Reuters)