Kuwait Finance House recouped early losses, which were sparked by a slump in its third-quarter profit, but other Kuwait bluechips ended lower as investors booked profits at month-end to weigh on the country's index.
KFH ended flat, having been down as much as 3.3 percent intraday.
The Islamic lender posted a 23 percent decline in third-quarter net profit. Net income in the three months to September 30 fell to 26.5 million dinars compared with 34.3 million dinars with the same period a year ago.
"KFH's results were below expectations. We are of the view that this was mainly due to increasing provisions - its operating profitability hasn't changed and continues to do well," said Shahid Hameed, Global Investment House head of asset management for the Gulf region.
"KFH's shares have lagged in the banking rally of the past three to four months on expectations it would underperform in terms of earnings, so the Q3 numbers are largely already priced in."
Kuwait's bank index eased 0.5 percent, trimming its gains to 33 percent since July 4.
Ahli United Bank fell 0.9 percent and Boubyan Bank slid 3.1 percent.
The main index dipped 0.05 percent to 7,064 points as investors book month-end gains. This is a common practice on many regional bourses, but is often more pronounced in Kuwait due to the dominance of the financial sector, with many companies deriving their earnings from trading the market, while banks and other companies also have local share portfolios.
Emaar Properties was the main drag as
Dubai's index eased from Thursday's six-month high,
with real estate-related stocks dominating trade.
Emaar dropped 1.5 percent, developer Deyaar fell by
the same margin percent and contractor Drake & Scull slipped 1.2 percent. This trio accounted for nearly half of all
shares changing hands.
The index fell 0.7 percent to 1,765 points.
Emirates NBD climbed 0.9 percent, taking its
October gains to 15.3 percent as investors shrugged off a slump in
the lender's quarterly profit, but analysts remained wary.
"There's some concern over rising NPLs at Emirates NBD and
the bank referred to further rises in its NPL ratio for the next
6 to 8 months - its tone was quite apprehensive compared to
other UAE banks," said Raj Madha, Rasmala senior banking
National Bank of Abu Dhabi edged up 0.4 percent.
On Tuesday, the lender reported a slight increase in
"In Q2, NBAD failed to show it was different from the rest
of the bank sector, yet it continues to trade at a substantial
premium, so its 3 percent loan growth in Q3 was a relief and
showed the bank was back on track," said Madha.
First Gulf Bank climbed 2.4 percent, extending gains
since it announced its quarterly earnings.
"It's too early to say banks have turned the corner, but
they can at least see the corner," added Madha.
Abu Dhabi's index slipped 0.03 percent to 2,816 points.
Emirates Telecommunications Corp (Etisalat)
weighed, falling 1.7 percent to take its losses to 4.6 percent
since reporting slumping quarterly profit.
Bank Sohar slumped to a three-month low after reporting earnings, while Oman's index declined for second session in three as investors booked end-of-month profits on the final day's trading of October.
Bank Sohar dropped 3.9 percent to its lowest close since July 27.
"Higher specific provisioning pulled down Bank Sohar's net earnings in Q310 to 2.2 million rials (down 30 percent quarter-on-quarter), thus the stock plunged in today's session," said Gunjan Gupta, head of research at Oman Arab Bank.
Other lenders also struggled. National Bank of Oman fell 1.4 percent and Oman International Bank lost 0.8 percent.
Oman's index fell 0.4 percent to 6,553 points, trimming its October gains to 1.2 percent.
"We observed partial profit booking owing to month-end," added Gupta.
Petrochemical stocks boosted Saudi Arabia's index on expectations a new round of quantitative easing by the U.S. Federal Reserve will boost commodity prices, but doubts about the kingdom's bank sector limited overall gains.
Saudi Basic Industries Corp (SABIC) climbed 1.3 percent to a five-month high, while Saudi Kayan added 0.6 percent and Yanbu National Petrochemical Co (Yansab) added 0.7 percent.
Petrochemical product prices are up about 9 percent in October, said Hesham Tuffaha, Bakheet Investment Group head of research, boosting the sector's shares but the outlook for the Saudi bourse's two other two main sectors -- telecoms and banks -- is murky.
"Telecoms are looking to regional expansion because their home market has high penetration, while investors were shocked by bank results - provisions were higher than expected and uncertainty over the sector remains, so investors may look to other regional markets that offer lower valuations," said Tuffaha.
Petrochemicals stocks are trading at a price to earnings ratio of between 11 and 13, Tuffaha said, below the market average of about 14, so have further upside potential in the near term, especially with product prices seen rising further if a new quantitative easing programme by the U.S. Federal Reserve comes within expectations.
This will essentially flood markets with money, debasing the dollar and pushing up commodity and oil prices as investors try to hedge their exposure to the U.S. currency.
Al-Rajhi Bank fell 0.3 percent and Saudi Hollandi Bank dropped 0.7 percent.
The bank sector edged up 0.02 percent, trimming its October losses to 4.1 percent, with bank stocks in retreat after third-quarter earnings missed estimates due to increased provisions.
The main index climbed 0.3 percent to 6,374 points.
"I don't think the market will be able to go much beyond current levels," said Tuffaha, adding the index is unlikely to make a sustained break above 6,500 points in the near term.
Industries Qatar and Qatar National Bank edged higher, helping Doha's index hold firm in early trade and the country's stocks are likely to remain a favourite regional pick for international investors.
QNB climbed 0.2 percent and Industries Qatar added 0.3 percent, but Doha Bank dropped 0.6 percent and Barwa Real Estate lost 0.3 percent.
"I think new money from foreign investors will come into the Qatar market - the interest is clear and when these investors were liquidating positions in other Gulf markets, they kept their holdings in Qatar," said Samer al-Jaouni, General Manager of Middle East Financial Brokerage Co.
"They understand the potential behind the economy, especially in the energy sector and Qatar is likely to be foreigners' first choice in the Gulf.
"Fundamentally, corporate results justify current valuations. The only thing we are not seeing is heavy volumes, which is a bit of a concern."
The index slipped 0.01 percent to 7,804 points.
"The index (has) resistance at 7,828 points and is going through a correction," NBK Capital wrote in a research note.
"Book partial profits at current levels. The major trend is up. Traders can re-enter at lower levels close to 7,600."
Qatar's economy is forecast to grow 15.5 percent in 2010, according to a September Reuters poll of analysts. (Reuters)For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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