Dubai reaches six-month high while First Gulf Bank shares also up after lender's Q3 results beat forecasts
Dubai's Emaar Properties made its
largest gain for seven weeks after reporting its third-quarter
earnings, helping Dubai reach a six-month high while First Gulf
Bank (FGB) was also up after its profit beats forecasts.
Emaar rose 3.4 percent, its biggest advance since September 5.
The developer's third-quarter profit missed estimates, but
analysts are largely bullish about its prospects.
Emaar's rise helped Dubai's index climb 2.6 percent
to 1,777 points, its highest finish since April 15.
FGB added 1.8 percent after its quarterly profit fell 9
percent to 849 million dirhams ($231.2 million), but this was
above a consensus estimate of 804 million dirhams.
"FGB's results were pretty good and that was based on
stronger rising net interest income," said Raj Madha, Rasmala
senior banking analyst.
"Loan quality also seemed to be under control. The only
disappointment was from its trading-related income, but this is
of a volatile nature."
Abu Dhabi Commercial Bank rose 0.4 percent. On
Tuesday, it posted a jump in third-quarter profit.
"ADCB was in many ways the opposite (to FGB), reporting
slightly disappointing net interest income, but trading-related
income was extremely strong," added Madha.
"Both FGB and ADCB showed improved loan quality, though.
Some people are worried about loan growth, but that isn't what
banks should be focusing on right now."
Abu Dhabi's index slipped 0.2 percent to 2,817 points.
Emirates Telecommunications Corp (Etisalat) was the
main drag, dropping 1.7 percent.
Kuwait Projects Co (KIPCO) helped its local index hit a two-week high, but Kuwait stocks' gains are unlikely to be sustained in longer term, an analyst warned, because valuations far exceed earnings.
KIPCO climbed 2.1 percent, National Investments Co climbed 3 percent and National Bank of Kuwait rose 1.5 percent.
These gains helped the country's main index climb 0.2 percent to 7,063 points, hitting its highest level since October 14.
Many investors, however, prefer to use the weighted index, which was up 24 percent year-to-date to be the best performing Gulf Arab benchmark in 2010.
"Most institutional investors have been underweight in Kuwait this year, but enthusiastic local retail investors have enabled Kuwait stocks to rally," said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.
"These investors have been over-optimistic and while the market may continue to do well in the short term, in the medium to long term, Kuwait's quality of earnings are the lowest and valuations the highest, so the market will probably suffer a sharp correction."
Industries Qatar hit a six-month high, helping Doha's index rise for a fifth session in six and further gains are forecast because of attractive valuations and the country's safe haven status relative to its Gulf Arab peers.
IQ climbed 1.2 percent, hitting its highest level since April 27. It is up 5.3 percent since October 19, while oil has gained 3.2 percent over the same period, with crude prices seen as a barometer for petrochemical producers' likely performance.
Barwa Real Estate and Vodafone Qatar each rose 0.6 percent. Qatar National Bank fell 0.1 percent.
The index climbed 0.2 percent to 7,813 points, taking its gains to 12.3 percent in 2010.
"Despite doing well this year, valuations remain attractive and the dividend yields for the likes of QNB, Doha Bank, Commercial Bank and Industries Qatar remain decent," said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.
"Qatar is a safe name and if foreign investors come into the region, Qatar will be the first recipient of that inflow." Qatar's economy is forecast to grow 15.5 percent in 2010, according to a September Reuters poll.
Commercial Bank of Qatar was flat, while Doha Bank rose 0.2 percent. (Reuters)