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Wed 30 Mar 2011 10:41 AM

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Saudi Arabia closes up, bouyed by earnings hopes

Analysts expect a pull back over the next seven to ten days as market corrects itself

Saudi Arabia closes up, bouyed by earnings hopes
BOUYED INDEX: Saudi Arabias index closed higher for the fifth day in seven, bouyed by upbeat expectations (Getty Images)

Saudi Arabia's index edged higher, rising for the fifth day in seven on upbeat expectations for first quarter earnings but gains may be limited.

The benchmark rose 0.7 percent to 6,563 points and is up 10.5 percent in March.

"For short-term technical indicators, we do show a diversion on the volume indicator, which indicates high possibility of market correction down to 6,380," said Youssef Kassantini, a Saudi-based financial analyst. "Overall, we do expect a pull back for the next seven to ten days."

Market mover Saudi Basic Industries Corp (SABIC) jumped 2.4 percent and large cap stocks Saudi Telecom Co and Saudi Electric added 0.5 and 0.7 precent respectively.

"Q1 earnings will be excellent for the petrochemical sector. Also, we expect a bit of encouragement in the banking sector. These two sectors should pull the market forward for Q1, going into Q2," said Kassantini.

Al Jazira Bank gained 0.5 percent after the bank completed a SR1bn ($267m) 10-year Islamic bond sale which was four times oversubscribed.

UAE markets slipped as Air Arabia weighed on Dubai. Market is trading on technical indicators as volumes remain low and foreign interest is muted.

Air Arabia fell 9.1 percent, after its dividend payout. The stock accounted for a third of shares traded on the index.

Developer Emaar Properties shed 1.6 percent, giving back gains from Tuesday after its shareholders approved a surprise ten percent cash dividend.

"Investors are not happy with Emaar's 10 percent dividend," said Shadi Ramadan, head trader at Al Dhafra Financial Broker.

"They were expecting it to be around 20 percent."

Dubai's index slipped 0.8 percent to 1,543 points, its week-low. The benchmark is down 5.4 percent this year.

"Technical indicators called for a correction. Every customer is a speculator in the market now. The lack of liquidity is making it difficult for the market," Ramadan said. Telco du added 2.6 percent ahead of an annual general meeting later Wednesday.

Abu Dhabi's index was flat, down 0.07 percent at 2,633 points. Volumes hit a nine-day low.

Emirates Telecommunications Corp (Etisalat) slipped 0.5 percent and Aldar Properties dropped two percent.

"Foreign investors are waiting to fish in local markets if they go up. But they are only short-term investors," Ramadan said.

Kuwait's index slipped 0.5 percent to 6,295 points, ending a three-day rally as Agility weighed. The stock ended five percent lower after a US court ruling against the company spurred a sell-off.

Analysts said the index will see increased activity on Thursday, first-quarter's last trading day. The benchmark was down 9.5 percent this year.

Oman's index fell 1.8 percent tp 6,225 points, in a session of profit-taking prior to the last day of first-quarter trading.

Renaissance Services slipped 3.9 percent, accounting for a fifth of all shares traded on the index. It extended Tuesday's losses after its chairman reportedly said the company may delay listing of Dubai-based subsidiary's London listing if market sentiment affects valuation.

Omani Qatari Telecom (Nawras) added 0.3 percent, accounting for more than half the shares trades.

Qatar's index slipped 0.1 percent to 8,389 points, reversing some of Tuesday's gains. Gainers outnumbered losers almost two to one. Market bellwether Industries Qatar fell 0.7 percent and Qatar Telecom shed 1.7 percent.

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