By Matt Smith
Rising provisions sees forecasted earnings fall as ME bourses register thin trading.
Saudi bank shares tumbled on Monday following disappointing earnings, weighing on the index, as most Middle East bourses retreated in thin trading as cautious investors awaited further results.
Dubai's index slipped to a two week low, Kuwait fell for the first session in three and Egypt, Abu Dhabi, Qatar also declined, with only Bahrain and Oman rising, the latter edging up 0.1 percent to an 11 week high.
Saudi Hollandi Bank fell 3.8 percent after posting its first quarterly loss for two years and Banque Saudi Fransi dropped 3.6 percent after its fourth quarter profit dropped 43 percent.
Both lenders blamed rising provisions for below forecast earnings. Samba Financial Group also fell as its own profit missed estimates.
Hesham Abo Jamee, Bakheet Investment Group head of asset management, said: "I expected a bigger drop in the market, so the reaction has been quite good (to the trio of bank results)."
Saudi Arabia's index dropped 0.4 percent, its second straight decline.
"Today's fall is acceptable after the results and I don't think it will fall more than 1 percent after tomorrow," added Abu Jamee.
Dubai's Arabtec declined for a second day since agreeing to sell a majority stake to Aabar Investments. The $1.7 billion deal will be through convertible bonds, diluting existing holdings.
Arabtec fell 3.4 percent to $0.71, while Aabar slipped 1.6 percent, having risen 11 percent since Wednesday.
Matthew Wakeman, EFG Hermes managing director for cash and equity linked trading, said: "Buyers with a long term view continue to mop up Arabtec into weakness and give short term traders an exit."
He added: "This comes down to two points of view, you either are looking at the long term value that can be created by the Aabar involvement and the cash injection or you are focusing on the dilution of the shares short term."
Arabtec's stock will remain volatile until the 2.30 dirham a share deal is approved, said Mohammed Yasin, Shuaa Securities chief executive.
Yasin added: "I believe that long term investors and fund managers will be trying to accumulate this share gradually, but rather more aggressively if it gets closer to that price."
Dubai's index fell 0.6 percent, with Emaar Properties losing 1 percent to reach its lowest finish of 2010.
Wakeman added: "What it has done is shaken investor confidence about how their minority interests are handled and that's why we are seeing selling pressure across the board."
Kuwait's Agility climbed 1.6 percent, its second straight gain since saying a US court case had been delayed until late January.
Agility is accused of defrauding the US Army and is down 40 percent since charges were brought in mid-November.
Ammar Hajeyah, assistant vice president at Global Investment House, said: "There's no clear explanation from the company about the financial impact of the court case, so investors are very cautious."
Qatar Real Estate (Alaqaria) rose for a second day since agreeing terms to merge with Barwa Real Estate.
According to the deal terms, each Alaqaria share will be exchanged for 1.1 Barwa shares, so the two stocks are adjusting to this ratio. Alaqaria climbed 7.9 percent to $8.80, while Barwa fell 2.7 percent to $8.58. (Reuters)