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Mon 1 Nov 2010 11:15 AM

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SABIC at 25-week high; Saudi extends gains

UPDATE 4: Kingdom's index TASI advances for a sixth session in eight

SABIC at 25-week high; Saudi extends gains
STOCK WATCH: Dubais mid-cap property stocks surged as speculators rotated money away from the bourses heavy volume stocks.

Saudi Basic Industries Corp (SABIC) hit a 25-week high, helping the
kingdom's index TASI advanced for a sixth session in eight.

SABIC rose 2.1 percent to its highest finish since May 12. It was up 14
percent since it reported above-forecast third quarter earnings on Oct. 17.

The index climbed 0.2 percent to 6,364 points.

"It's all about petrochemicals and this started with SABIC's
results," said a Riyadh-based analyst who asked not to be identified.

"Petrochemical stocks are cheap - when U.S. markets and oil rose, we
didn't participate, so something had to give and we now seem to be on a
catch-up play."

Dubai's mid-cap property stocks surged after lslamic mortgage provider Tamweel said it would resume lending following a two-year freeze, helping Dubai's index DFM hit a five-month high.

Deyaar climbed 8.8 percent and Union Properties added 7.3 percent.

"Tamweel's announcement helped sentiment across the board and we saw concentration in the retail-orientated real estate companies like Deyaar and Union Properties," said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments.

"Today's gains are a retail move and not a fundamental move, but nevertheless UAE markets remain strong."

The index climbed 1 percent to 1,782 points, its highest finish since April 15.

Sorouh Real Estate ended lower after its third-quarter profit slumped, tracking losses on Abu Dhabi's index ADI.

Sorouh fell 2.2 percent. The developer's quarterly profit dropped 68 percent, hit by one-off expenses.

"For real estate companies, quarterly results are less of a concern than their balance sheet," said Majed Azzam, AlembicHC real estate analyst .

"Sorouh has enough liquidity to continue with its development programme and was able to raise money in the third quarter with a syndicated loan from Abu Dhabi banks as well restructuring some other debts.

"So it looks like Sorouh has enough money to fund its developments over the next couple of years, although we are slightly worried by the slowdown in collection in receivables, which could ultimately affect its liquidity position."

Rival developer Aldar Properties also declined, dipping 1.2 percent.

"If Sorouh is down today because of its results, that is the wrong reaction, but it is expensive compared to its peers, especially Aldar," said Majed Azzam, AlembicHC real estate analyst.

"The market is discounting a much worse scenario for Aldar - Sorouh has a much stronger liquidity position and is a safer bet, but we don't think it deserves a 50 percent premium to Aldar."

Abu Dhabi's index fell 0.5 percent to 2,803 points.

Zain rebound from Monday's three-week low, helping Kuwait's index KWSE hit a five-month peak.

Zain climbed 4.4 percent. National Investments Co (NIC), another Kharafi-linked firm, rose 3.9 percent. NIC is orchestrating the Kharafi-led sale of a 46 percent stake in Zain to Abu Dhabi's Emirates Telecommunications Corp (Etisalat).

Kuwait Finance House ended flat for a second day since announcing a 23 percent decline in third-quarter profit.

"KFH still has problems in its loans and investments, which are two of its major types of assets," said Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait.

"It should start to recover next year, but has underperformed the rest of the bank sector in Q3."

Nafisi forecast KFH's share price could make limited declines, not falling by more than about 5 percent as government funds and long-term investors move to support the stock.

Kuwait's index climbed 0.3 percent to 7,081 points, its highest finish since May 18.

Qatar's benchmark QSI slipped 0.3 percent to 7,770 points.


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