Traders book profits in local petrochemical stocks, but the kingdom's index TASI ends flat
Sliding oil prices spurred Saudi day traders to book
profits in local petrochemical stocks, but the kingdom's index
TASI ended flat as some banks rise.
Saudi Basic Industries Corp (SABIC) and Rabigh
Refining and Petrochemical Co each fell 0.7 percent,
while Saudi Kayan lost 0.8 percent.
"The market is trading sideways and investors are in a
cautious mood today," said a Saudi-based fund manager who asked
not to be identified. "Weakness in oil prices gave day traders
an excuse to book profits in petrochemicals.
"Petrochemical stocks are reasonably priced and will move
along with oil prices in the near term."
Banque Saudi Fransi rose 1 percent and rival
lender SABB added 2.4 percent.
"The banking sector has brought positivity on expectations
that the era of provisioning is over and lending to the private
sector will improve this year," added the fund manager.
The index edged up 0.02 percent to 6,724 points.
Oil was down 1.4 percent at $86.61 per barrel at 1239
GMT after an overnight rate increase in India and a surprise
contraction in the UK economy fanned concerns about the pace of
the global recovery.
Aldar Properties plunged to a new
five-year low and slumping real estate prices are likely to
further dampen sentiment for the indebted developer.
Aldar, which has made a loss for four straight quarters,
dropped 4.2 percent to AED1.82, its lowest finish since at
least April 2005. The state-linked firm's shares have plunged
since it unveiled a restructuring plan dilutive to shareholders.
Aldar's management has indicated it will repay about AED12bn ($3.27bn) in debt by 2013, says Jad Abbas,
EFG-Hermes real estate analyst.
A Reuters poll last week forecast oversupply would cause Abu
Dhabi and Dubai house prices to make further double-digit
declines, with the latter's prices already about 60 percent
below a 2008 peak.
"I don't think we will see a recovery in the UAE real estate
sector in 2011 - there is still more supply coming on stream,
putting pressure on prices and rents, but we need to
differentiate between Dubai and Abu Dhabi," says EFG's Abbas.
"Dubai is further down the cycle and I think Abu Dhabi has
further to go."
Abu Dhabi's index ADI dropped 0.3 percent to 2,667 points,
its lowest close since October 5.
Dubai's benchmark DFM fell 0.4 percent to 1,624 points
as property-related stocks slide.
Emaar Properties dropped 1.5 percent, contractor
Drake & Scull lost 1.8 percent and builder Arabtec
fell 2.2 percent.
Kuwait's index KWSE ended higher as mid-cap
banks rallied, but valuations may have run ahead of fundamentals.
Ahli United Bank rose 4.6 percent and Burgan Bank
added 3.6 percent. These gains helped the bank index
limb 0.5 percent to a new 27-month high.
Banks stocks have surged since Kuwait last year unveiled a
$104bn development plan - to be part-financed by banks -
that will improve the country's infrastructure, but few details
have since emerged.
"Given the sheer size of the plan, I would wait to see
concrete signs that it has passed through all the necessary
hurdles first," says Ibrahim Masood, senior investment officer
at Mashreq Bank.
"Fundamentals need to catch up with where Kuwait stocks are
trading - valuations have run ahead of themselves, especially
when you look at some of the risks such as the structural issues
"Kuwait's market doesn't look very exciting from a
Zain fell 2.7 percent, a day after banking
sources said the telecoms operator is offering banks four
levels of participation in syndication for a $1.2bn loan.
Kuwait's main index climbed 0.2 percent to 6,973 points.