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Wed 20 Jan 2010 10:27 PM

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SABIC lifts Saudi market; ME bourses mixed

Chemical firm to have good 2010, if global economy remains stable and continues growth.

Saudi Basic Industries Corp (SABIC), one of the world's biggest chemicals firms, helped lift the index on Wednesday, after hitting a 15 month intraday high on earnings that beat forecasts.

The Saudi benchmark climbed 0.2 percent, while other Middle East markets were mixed, with investors wary as world stocks dipped.

SABIC rose 0.6 percent, hitting its highest level intraday since Oct 21, 2008 after quarterly profit rose 15 fold.

Hesham Abo Jamee, Bakheet Investment Group, head of asset management, said: "The expectations are that 2010 will be a good year for the company if the global economy is stable and continues to improve,"

He added: "This should reflect positively on the stock, which could rise 20-30 percent for the year."

On Wednesday, SABIC's chief executive said he expected earnings to improve on higher product prices and rising oil prices, while East Asia will lead demand growth.

Disappointing bank earnings will affect Saudi Arabia's market, said Abo Jamee, but the high provisions taken by lenders, which caused most to miss analysts' estimates, will be positive as banks clean up their books.

He said: "Most banks will show good profits in the first quarter of 2010, with minimal provisioning."

Nevertheless, bank stocks are likely to trade sideways until the second half of the year, he said.

Abo Jamee added: "Lending is still very low, but maybe it will be better in the second half of 2010."

A final-hour rally saw Dubai's index rise by 0.9 percent, easing away from Tuesday's six-week low. Volumes hit a seven week low and were the second lowest of the past 12 months.

Ayman el Saheb, Darahem Financial Brokerage director of operations, said: "There was a little buying towards the end of the session, but it's too soon to say whether the market is stabilising - it could be pure speculation."

Builder Arabtec climbed 2.6 percent and Emaar Properties rose 1.8 percent. The duo have been among the biggest losers in Dubai's early year slump.

Richard Frost, head of research sales, Al Futtaim HC Securities, said: "Dubai real estate, having dropped significantly in '08/'09, showed some stability in (the second half of 2009). But since then it has not shown any firm direction."

He added: "Nobody is yet willing to price in a turnaround in real estate prices."

Abu Dhabi fell for a seventh session in eight as banks struggled. National Bank of Abu Dhabi fell 1.3 percent and Abu Dhabi Islamic Bank lost 1.8 percent.

Frost said: "There are still big question marks over UAE banks' asset quality and whether/when NPLs (non-performing loans) will begin to come down meaningfully, and therefore reduce provisions."

National Bank of Kuwait, rose 1.9 percent, its first gain since announcing plans for a capital hike on Monday. Other Kuwait banks have made similar moves as lenders deal with rising provisions.

Essa al Hasawi, a dealer at Noor Financial Investment Co, said: "Investors expect banks to make more capital increases and for banks to take further provisions in 2010."

Oman slipped to a two week low, falling 0.6 percent.

Sayed Quadry, vice president of business development, Amwal Investment, Muscat, said: "Volumes have been low, which shows some weakness in investor confidence."

He added: "Oman results have been okay, but there's some gloom around stock markets globally at the moment." (Reuters)

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