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Wed 3 Nov 2010 11:48 AM

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Saudi stocks dip as traders shun world gains

UPDATE 3: Dubai's index DFM ends lower for a second day, having given up initial gains

Saudi stocks dip as traders shun world gains
STOCK WATCH: Property-related stocks rose in Dubai and Abu Dhabi, clawing back some of Tuesdays losses in a subdued opening

Saudi bluechips weighed on the country's index TASI, with Middle East
markets largely unmoved by gains on emerging and developed markets.

Saudi Basic Industries Corp (SABIC) and Samba Financial Group each fell 0.8
percent, while Saudi Telecom Co dropped 0.5 percent.

These declines helped push the index down 0.5 percent to 6,344 points,
despite crude hitting a six-month high and world stocks also gaining ahead of a
US Federal Reserve meeting that is expected to herald a new bout of
quantitative easing.

"We have underperformed for the past few weeks and tend to be
correlated more to the downside for both oil and global markets," said
Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked

"It seems local investors are waiting for internationals to come in and
lead the market up. Developed and emerging markets are doing well, so
internationals don't have a shortage of places to put their cash, but with MENA
underperforming they should return sometime and locals don't want to risk
buying too early."


Dubai's index DFM ended lower for a second day, having given up initial gains, and a lack of local catalysts means stocks are likely to be at the mercy of movements on international markets, an analyst warned.

Emaar dropped 0.5 percent, Deyaar lost 0.6 percent and Arabtec slid 0.9 percent.

The index fell 0.4 percent to 1,735 points.

"Q3 earnings are out and we didn't see exceptional results, apart from maybe in Qatar - for Saudi, the UAE and Oman the numbers have mostly come in line or below expectations," said Adel Nasr, United Securities brokerage manager.

"So there's not much motivation to get into the market, although if oil prices go up our equity markets should continue to do well. Such a move wouldn't be supported by financial results, however, so we'll be vulnerable to any negative sentiment from global markets."

Abu Dhabi:

In Abu Dhabi, Aldar Properties fell 2.5 percent to a new seven-week low, taking its losses to 8.2 percent in the two sessions since the developer's chief executive quit.

The UAE capitals' index dropped 0.07 percent to 2,762 points.

Oil hit a six-month high above $84 after US fuel inventories fell, and ahead of the widely anticipated US Federal Reserve's quantitative easing announcement due later.

Emirates Telecommunications Corp (Etisalat) fell 0.5 percent to a three-week low as it prepares to start due diligence to buy a controlling stake in Kuwaiti rival Zain nears. After market hours, Etisalat said it did not expect the deal to be concluded before the end of the first quarter of 2011.


Kuwait's Zain fell as a stake sale in the telecoms operator nears, weighing on the country's index KWSE.

Major shareholder Kharafi group has signed an agreement to start the due diligence process to sell 46 percent in Zain to Emirates Telecommunications Corp (Etisalat).

Zain dropped 1.4 percent, trimming its gains to 11.1 percent since the deal was announced in late September.

"It's just small investors playing with the stock - the bigger players didn't react to this news, which was expected, and the decline was nothing major," said a Kuwait-based trader who asked not to be identified.

The benchmark fell 0.2 percent to 7,119 points.

"The index has strong support at 7,100 and it didn't even get close to this, so it's looking quite solid," the trader added.


Qatar's index QSI climbed 0.4 percent to 7,799 points, rising for a first session in four.

Qatar National Bank and Industries Qatar were the main supports, gaining 0.9 and 0.6 percent respectively.


Institutions bought into bank stocks, lifting Oman's index MSI, but retail investors sold the wider market to take positions in newly-listed Nawras.

Bank Muscat climbed 0.5 percent, National Bank of Oman added 1.1 percent and Oman International rose 1.6 percent.

"The market rebounded slightly at the beginning of the session, but started to retreat as investors switched from the industrial to banking sectors," said Adel Nasr, United Securities brokerage manager. "There was strong institutional buying in Bank Muscat, plus Galfar."

Galfar Engineering dropped 0.9 percent.

The index rose 0.3 percent to 6,500 points, ending a three-session losing streak.

Telecoms operator Nawras, which listed on the Oman bourse on Monday, fell 3.2 percent to 0.708 rials, declining towards its initial public offering price of 0.702 rials.

"Retail investors are selling the market to buy into Nawras in huge quantities and I believe this trend will continue," said Nasr.


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