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Tue 29 Mar 2011 10:43 AM

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Saudi nears six week high; property stocks gain

Oman's Renaissance tumbles over subsidary Topaz's LSE listing delay fears

Saudi nears six week high; property stocks gain
INDEX RISE: Saudi Arabias benchmark rose for a seventh session in nine (Getty Images)

Saudi Arabia's benchmark edged higher, rising for a seventh session in nine, but investors are cautious ahead of first-quarter earnings.

The benchmark climbed 0.2 percent to 6,519 points, nearing Sunday's six-week high.

Bluechips are mixed. Saudi Telecom Co fell 1.8 percent, but Saudi Electricity Co rose 1.5 percent.

The real estate index climbed 0.4 percent to a six-week high, extending gains on renewed speculation Saudi Arabia's long-awaited mortgage law would soon be approved.

"Real estate stocks may have an effect for next two days on the mortgage law," said a Riyadh-based trader who asked not to be identified. "I would be cautious on real estate numbers. We could see some weakness. In the long-term, they are good, but people are short-term here."

Emaar Economic City rose 0.7 percent and Taibah gained 2.6 percent.

Earlier this month, the Saudi king announced $93bn in handouts, which includes SR250bn ($67bn) to be spent on 500,000 new homes, while on Friday the kingdom set up a ministry for housing.

Renaissance Services tumbled on fears a subsidiary's $500m London listing may be delayed, weighing on Oman's index.

The index slipped 0.5 percent to 6,339 points, a 12 day low.

Renaissance fell 6.6 percent, with the company holding an analysts' get-together after Monday's annual meeting.

Dubai-based unit Topaz's offering was expected to give it a market capitalisation of about $1.7bn.

"During the meeting, the management indicated it will delay the IPO until it receives the implied valuation of $1.5bn," investment bank EFG-Hermes wrote in a research note.

"There was a statement from the CEO that the IPO can be deferred till starting next year if the recent events in the Middle East affect the valuation of Topaz."

The stock had risen as much as 5.2 percent after the IPO announcement earlier this month, but has now given back these gains.

"If the Topaz IPO goes through, we will see a strong comeback for the Oman market," said Adel Nasr, United Securities brokerage manager.

Bank Muscat slipped 0.6 percent, but National Bank of Oman added 0.3 percent.

UAE markets ended mixed as Dubai gave back early-session gains, with Emaar Properties' surprise dividend providing only a short-term lift.

Dubai's index ended lower 0.1 percent at 1,555 points, ending a five-day rally.

Emaar Properties climbed 0.3 percent after company shareholders approved a 10 percent cash dividend, its first dividend since 2008.

"The dividend announcement came as surprise and the market has taken it positively, but it seems the board was pressured into announcing the payout, rather than this being a discretionary distribution," said Jad Abbas, EFG-Hermes real estate analyst.

"Emaar wanted to preserve cash for a rainy day and it has some short-term refinancing risk we can't ignore."

Emaar has debt worth AED4.5bn maturing in 2011, Abbas says.

"We expect most of this to be rolled over," he added. "2011 should be a relatively good year for Emaar, with a shift towards its international operations."

UAE bank earnings should improve this year, said Robert McKinnon, ASAS Capital chief investment officer.

"For sectors like real estate I'm less optimistic, but the ones with Saudi Arabia exposure would obviously still stand to benefit." said Robert McKinnon, ASAS Capital chief investment officer.

Du rose 1.6 percent. On Sunday, Nomura started coverage of the telecoms operator, giving it a neutral rating and a price target of 3.32 dirhams.

Dubai Financial Market ended 2.3 percent lower.

Abu Dhabi's index edged higher 0.04 percent to 2,635 points, taking its March gains to 1.8 percent.

Most bluechips rose, with Aldar Properties and Sorouh Real Estate gaining 1.3 and 3.3 percent respectively.

Qatar's index rose 0.3 percent to 8,399 points. Barwa Real Estate climbed 1.3 percent and Qatar National Bank added two percent.

Kuwait's index ended higher for a third day, while volumes remained thin ahead of the end of the first quarter.

"The market is very dull, volumes are very low," said a Kuwait based trader on condition of anonymity. "Investors are laying low until results are out."

Yet trading is expected to increase later this week because Thursday is the final day of the quarter and traders typically try to boost the valuation of their portfolios, he added.

Kuwait's benchmark climbed 0.3 percent to 6,323 points. The index is down 2.4 percent in March.

Kuwait Finance House fell 1.9 percent, while Commercial Bank added 1.1 percent and Al Ahli Bank rose 1.6 percent.

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