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Mon 2 Aug 2010 11:05 AM

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Petchems lift Saudi as telecoms, banks drop

UPDATE 4: SABIC up 1.7 percent; Saudi Kayan Petrochemicals Co rises 0.6 percent.

Petchems lift Saudi as telecoms, banks drop
STOCK NEWS: Abu Dhabis index edged up while Dubais fell in early trade. (Getty Images)

Gains in petrochemical and mining stocks outweighed declining bank and telecoms shares as Saudi Arabia's index edged higher.

Saudi Basic Industries Corp (SABIC), the Arab world's largest listed company, climbed 1.7 percent, and Saudi Kayan Petrochemicals Co rose 0.6 percent.

The petrochemicals index is up 6.1 percent since July 4, while oil has climbed 11 percent over the same period.

"Petchems stocks have gained since forming a floor at the start of July, so may be the subject of some profit-taking in the coming days," said Hesham Tuffaha, Bakheet Investment Group head of research.

Etihad Etisalat (Mobily) and Saudi Telecom Co fell 1.8 and 0.8 percent respectively, a day after sources said the Saudi regulator was looking to ban certain Blackberry services.

Samba Financial Group dropped 2 percent and Riyad Bank lost 1 percent, but State-owned Saudi Arabian Mining Co (Maaden) rose 3.9 percent, extending gains since it reported a second-quarter profit.

The index climbed 0.3 percent to 6,332 points, its fifth gain in six sessions.

"Local investors take positions in petrochemical or bank stocks based on the wider economic outlook, it's not so much about specific stock valuations," added Tuffaha. "There are some gains in some small cap stocks, but this is speculation, not fundamentally driven - the bluechips are very hard to speculate in and remain stable."

Emirates NBD fell, extending declines since its second-quarter profit missed estimates as Dubai's index retreated for a third day.

ENBD dropped 2.4 percent in thin trade. A week ago, Dubai's largest lender reported a 53 percent decline in second-quarter profit.

Arabtec ended flat as investors gave little reaction to the builder's earnings, which also fell short of estimates.

The index fell 0.05 percent to 1,510 points.

"The month-long range remains in place, keeping the index in neutral mode," Shuaa Capital wrote in a research note.

"Until a decisive upside break materialises, there will be no reason to bet on sustainable upside."

Telecoms stocks were mixed, a day after the UAE telecoms regulator said it would ban select Blackberry services from October.

Du dropped 0.7 percent, while Abu Dhabi-listed Emirates Telecommunications Corp (Etisalat) fell 0.5 percent.

Abu Dhabi's index edged up 0.06 percent to 2,537 points.

Waha Capital surged 9.5 percent.

Industries Qatar (IQ) reached a five-week high as investors bought in ahead of the expected release of its second-quarter earnings on Wednesday, helping Doha's index reach a similar milestone.

IQ climbed 1.2 percent to its highest finish since June 27. The chemicals giant is forecast to report a 5 percent drop in second-profit, but with the stock down 12 percent year-to-date, investors are now stepping in, while firm oil prices are also providing support to regional petrochemical producers.

"Investors are buying Industries Qatar ahead of its results announcement on August 4," said Hani Girgis, assistant chief dealer at Dlala brokerage.

He said Commercial Bank of Qatar CBQ is on the cusp of breaking above a key resistance level, with foreign investors buying into the lender, in part because of its London GDR listing.

CBQ climbed 1.4 percent.

The index rose 0.4 percent to 7,035 points, its highest finish since June 28.

"The index can reach 7,200 points, but we don't have the power to break above this," Girgis added.

Kuwait's benchmark fell 0.5 percent to 6,624 points, with day traders again focusing on small-cap names.

Bluechips struggled on lacklustre volumes. Commercial Bank of Kuwait fell 2.2 percent and Kuwait Finance House lost 1.9 percent as none of the seven largest stocks advance.

"Support is at 6,600 points," NBK Capital wrote in a research note.

Oman's index edged lower in a mixed session for the bluechips as a four-day rally stalled, with traders looking to international markets for direction.

Oman Telecommunications (Omantel) fell 0.6 percent, Raysut Cement dipped 1.1 percent and Renaissance Services lost 1.8 percent.

"We're taking our cues from global markets - Oman's fundamentals are strong, but we can't escape the sentiment that comes from US and European markets," said Joice Mathew, United Securities head of research.

"Oman Q2 earnings were largely in line with expectations."

Bank Muscat and National Bank of Oman each climbed 0.6 percent.

"We're expecting banks' loans and assets to grow, but the worry is over exposure to Dubai World - Bank Muscat's exposure is the equivalent to around 20 percent of its annual profits," added Mathew.

The index slipped 0.04 percent to 6,328 points as investors book gains from a four-session, 2.7 percent rally.

World stocks kicked off August in a strong mood on Monday as results from BNP Paribas and HSBC boosted optimism for corporate earnings and the economic outlook for the rest of the year.

Abu Dhabi's Aldar Properties rallied from Sunday's 16-month intraday low as bargain hunters stepped in.

Aldar climbed 2.9 percent, trimming its decline to 45 percent since the end of the first-quarter.

The developer, often seen as the bellwether for the Abu Dhabi bourse, reported a second-quarter net loss of AED475 million ($129 million). Analysts polled by Reuters had forecast Aldar's quarterly loss would be AED130 million.

"Despite Aldar's shares falling from Q1, its results weren't fully priced in, although the reaction was relatively modest and we saw the same with ADCB (Abu Dhabi Commercial Bank)," said Ali Khan, managing director and head of brokerage at Arqaam Capital.

"The UAE is generally under-owned. Decent numbers seem to push stocks up 1-2 percent and bad numbers lead to a 1-2 percent fall - there's a certain amount of ambivalence among investors."

ADCB fell 0.6 percent. On Saturday, the lender reported a second-quarter loss of AED531 million.

Abu Dhabi's index edged up 0.03 percent to 2,536 points. It is down 7.6 percent year-to-date.

"Earnings have met expectations in that they have been largely neutral and not provided a catalyst to re-rate the market," added Khan. (Reuters)

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