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Mon 29 Feb 2016 07:18 PM

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Dubai's Arabtec shares surge, up 38% since January low

Buying is triggered by exchange data showing former chief executive Hasan Ismaik's stake had risen to 11.91%

Dubai's Arabtec shares surge, up 38% since January low

Stock markets in the Middle East ended mixed on Monday as local traders chased after small and mid-cap stocks in the United Arab Emirates, while Saudi Arabia, Egypt and Qatar gave up early gains as investors booked profits.

Riyadh's index initially rose as much as 1.0 percent as the banking sector gained, but then pulled back as traders cashed out of speculative stocks and the petrochemical sector. The index ended almost flat at 6,093 points, failing to break technical resistance on the early February and end-January peaks of 6,056-6,099 points.

Saudi Basic Industries, the petrochemical giant, retreated 1.0 percent.

But banking stocks remained resilient with Samba Financial jumping 5.1 percent and Saudi British Bank adding 2.2 percent. On Sunday, the central bank announced a housing mortgage scheme under which the government would guarantee 15 percent of payments; if it proves successful, the programme could boost business for banks.

Although day traders chasing quick profits weakened the Saudi market on Monday, Gulf bourses are starting to see more long-term investors returning to buy back beaten-down stocks amid signs that oil prices may have bottomed out, with Brent crude futures trading over $35 a barrel on Monday.

The latest monthly Reuters survey of Middle East fund managers, published on Monday, showed 43 percent said they expected to boost their allocations to Saudi stocks - the highest figure since February 2015. Only 7 percent anticipated reducing allocations.

After trading down in the first hour, Dubai's index jumped 2.0 percent to 3,240 points, breaking technical resistance on the late December peak of 3,189 points. This confirmed a reverse head & shoulders pattern formed by the highs and lows since December, and pointing up to around 3,600 points.

Builder Arabtec surged its daily limit and jumped 14.3 percent to 1.44 dirhams in its volume since June 2009. The stock is now up 38.0 percent from its January low and its next chart resistance is on the 200-day average, at 1.78 dirhams.

Buying was triggered by exchange data showing former chief executive Hasan Ismaik's stake had risen to 11.91 percent from 11.81 percent. It was not clear whether this was due to buying by Ismaik or simply a technical adjustment to the data, perhaps due to the consolidation of shares previously listed under another name, as sometimes occurs in United Arab Emirates markets. Ismaik could not be reached to comment.

Amlak Finance also saw its heaviest turnover since 2009; shares in the mid-sized finance firm rocketed 12.8 percent after it reported that net profit attributable to equity holders jumped 130 percent.

"Now it is about momentum trading in select stocks," said Muhammed Shabbir, head of equities funds at Dubai-based Rasmala.

The momentum trade was also seen in Dubai Financial Market , the only listed exchange in the Middle East. Volume reached a level last seen in June 2015; the stock jumped 7.8 percent, and is now up 36.0 percent from its mid-January low.

Abu Dhabi's stock index rose 1.8 percent after intially trading down. Volume was concentrated in small and mid-tier shares such as Eshraq Properties, up 5.5 percent.

Blue-chip banks, which were dormant in the first hour of trade, also helped lift the bourse with First Gulf Bank surging 3.2 percent.

In Qatar, the main index fell 0.4 percent after trading up as much as 0.5 percent. A sell-off in blue chips was the main drag with Islamic lender Masraf Al Rayan dropping 3.0 percent.

Similarly, Egypt's main index did not hold onto early gains and closed 0.2 percent lower. Orascom Telecom , the most heavily traded stock, fell 1.7 percent after initially rising the same percentage.

OTMT's subsidiary Beltone Financial signed a share purchase agreement on Sunday with Commercial International Bank to buy CIB's investment banking arm CI Capital. Beltone jumped 9.9 percent on Monday while CIB closed down 0.3 percent.

Yields on Egypt's three-month and nine-month treasury bills rose sharply at an auction on Sunday, signalling expectations for an interest rate rise next month.

Global Telecom, one of foreign investors' favoured Egyptian stocks, fell 1.0 percent to 2.06 Egyptian pounds after hitting a session high of 2.10 pounds.

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