UPDATE 4: Saudi TASI ends 0.3 percent lower, led by banking stocks.
Most Middle East markets ended lower on Tuesday with analysts expecting low volumes and high volatility to dominate in the period before the announcement of second-quarter results.
The region's largest bourses in Saudi Arabia TASI and Dubai DFM were unable to sustain gains from the previous session, with most major stocks coming under selling pressure.
"Usually, in the times close to the end of the quarter, investors sit back and wait for the results," said Hisham Tuffaha, head of investment research at Al Bakheet Investment Research, about the Saudi market.
"So even any gains will not be sustainable (in this period). The results will be the driver in the market; even the downgrade of Greece was not a surprise. The drop today is because of gains on Monday, volatility will remain," he said.
The Saudi index TASI ended 0.3 percent lower, led by banking stocks after petrochemical stocks recovered earlier losses as oil rose towards $76.
Dubai and Abu Dhabi both saw profit-taking after a bounce in the previous session.
Dana Gas weighed on the Abu Dhabi index ADI, ending 6.1 percent lower. A senior executive said the company held meetings to update investors recently but there was no major announcement expected.
Real estate stocks came under considerable selling pressure in both Abu Dhabi and Dubai, while banking stocks fell after a Moody's report maintained a negative outlook on UAE banks.
"Markets are trading on low volumes and any corrective bounce if seen shall face selling again," said Shiv Prakash, equity analyst - technical, at MAC Capital Advisors.
"For markets to witness short-term bullishness we must see a close above 1,550 (points) resistance levels," Prakash said about Dubai, adding that there was no fresh flow of funds.
Bellwether Emaar Properties declined 2.2 percent and Arabtec retreated 2.6 percent. Aldar Properties slipped 1.6 percent.
A report by Moody's on Tuesday said that asset quality among UAE banks will remain under pressure this year.
"Overall, the operating environment remains difficult, with low economic growth and investment, weak demand for loans, as well as investor confidence issues which are curtailing the banks' ability to access low cost, wholesale funding," said John Tofarides, author of the report.
Emirates NBD, Dubai's largest bank by market value, fell 0.8 percent and Dubai Islamic Bank dropped 1.5 percent. First Gulf Bank retreated 1.7 percent.
A similar picture was observed across other regional bourses, but Oman's index MSI was the only one to buck the trend and end higher, although traders pointed to news on Oman Cement lifting the market and not strong fundamentals.
"Overall, volumes are still low and we think the market will trade flat for the coming two to three weeks, until the results are announced."
Commercial Bank of Qatar fell 0.9 percent and Islamic lender Masraf Al Rayan slipped 1.4 percent. Heavyweight Industries Qatar also retreated, declining 0.9 percent to weigh on the index.
"Traders should continue to use conservative exit targets given that we remain in reactionary mode," said a note from Shuaa Capital.
Traders expected good earnings from Qatar-listed firms for the second quarter.
"The results are expected to be in line with Q1-2010 and better on year on year basis, specifically the big names," said Mohamed Abu Ghoush, head of equities brokerage at Al Ahli Bank.
The index retreated 0.5 percent to 6,987 points.
Oman Cement lifted the Muscat exchange MSI to buck the downwards regional trend on Tuesday, but analysts see the index moving sideways until the second quarter results are out.
Oman Cement jumped 7 percent, the biggest gainer on the index by far after the government agreed to reimburse the company 7.34 million riyals for losses on import of cement. The company said this would improve its profitability in the second quarter.
"There was good news about Oman Cement, and it's the only stock bringing the market up today," said Adel Nasr at United Securities.
"But we're already seeing the momentum easing and some selling pressure has begun. There's no real pressure on the bluechips and the banks, but the market is likely to be flat for the next two to three weeks, until results come out."
The index rose 0.4 percent to 6,119 points. (Reuters)
I know all shareholders are really holding on to Emaar only because Emaar is a heavyweight and will bounce back with a bang and atleast their ROI on investment will be there though there is no dividend and bonus