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Thu 28 Oct 2010 11:58 AM

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Emaar stocks make largest gain in seven weeks

Dubai reaches six-month high while First Gulf Bank shares also up after lender's Q3 results beat forecasts

Emaar stocks make largest gain in seven weeks
Dubais index climbed 2.6 percent to 1,777 points, its highest finish since April 15. (Getty Images)

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)

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