Banks and industrial stocks in Saudi Arabia rose, lifting the main index to its highest close since June 27. The benchmark rose 0.5 percent to 6,317 points.
Banks were among the strongest performers with Samba Financial Group and Banque Saudi Fransi rising 2.1 percent and 0.9 percent respectively.
Bellwether Saudi Basic Industries (SABIC) gained 1.2 percent.
Aldar Properties and Abu Dhabi Commercial Bank ended lower after posting a second-quarter loss, weighing on the main index.
Aldar, in addition, was also hit by a rating downgrade by Standard & Poor’s. The stock lost 0.4 percent and hit a 16-month intraday low.
“The downgrade reflects our view of the very challenging real estate market conditions in Abu Dhabi,” said Standard & Poor’s credit analyst Tommy Trask, “and the reliance of Aldar’s future earnings and cash flow on continued demand for both sale and rental of property and land.”
ADCB retreated 1.8 percent after the bank said it has an exposure worth of AED6.6 billion to indebted conglomerate Dubai World.
“Although the worst of the recession appears to be behind us, UAE banks remain risk averse and reluctant to extend credit to the private sector,” said Shuaa Capital, which conducted a stress test on the UAE banks.
“Our base case suggests that UAE banks are, on average, capable of absorbing the potential losses associated with more stringent default assumptions, thanks largely to the authorities’ efforts to strengthen banks’ balance sheets since the onset of the crisis,” Shuaa said.
Abu Dhabi’s index fell 0.4 percent to 2,535 points.
Dubai’s benchmark edged 0.1 percent lower to 1,510 points.
Kuwait’s index edged higher helped by two of the country’s major banks, which rose following a reassuring report from the IMF on the sector.
The benchmark rose 0.1 percent to 6,658 points.
Kuwait Finance House and Gulf Bank rose 3.9 percent and 2.3 percent respectively.
“The IMF in a study on Kuwaiti banks has said that, although the sector is heavily exposed to the real estate sector, they have sufficient financial resources to withstand a new crisis despite a sharp rise in their non-performing loans,” said EFG Hermes in a note to analysts.
“It put the combined capital adequacy of Kuwaiti banks at 18%, which is significantly above the 12 percent required by the Central Bank,” it added.
Qatar’s stocks retreated 0.4 percent to 7,005 points, led by heavyweight Industries Qatar, which dropped 0.9 percent.
Oman’s bourse ended higher for a fourth straight session to a two-month high with traders expecting the index to continue trading around this range.
Muscat’s index ended 0.6 percent higher at 6,331 points.
“We observed that sellers are controlling the market, as 84 percent of buyers are buying at the offer price — this is pushing up the market,” said Gunjan Gupta, head of research at Oman Arab Bank.
“Well received results are helping to push Oman’s service sector higher,” said Gupta.
“We expect that in near-term the index will trade between 6,290 points and 6,355 points,” she added.
Bank Dhofar and Bank Muscat gained 2.4 percent and 0.7 percent respectively. (Reuters)
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