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Thu 28 Jan 2010 10:33 AM

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Sorouh stocks rally despite weak Q4 results

UPDATE 3: Shares surge 4.5%, while Dubai ends higher for second day.

Sorouh Real Estate surged after reporting fourth-quarter earnings as gains on world markets lifted beaten-down stocks across the Middle East.

Sorouh climbed 4.5 percent, rebounding for a second day since slumping to a seven-week low on Tuesday. The developer reported a 39 percent drop in fourth-quarter profit, but its chief finance officer said he was "cautiously optimistic" for 2010.

Abu Dhabi Commercial Bank ended 9.5 percent higher, although this gain is warped by the use of closing average prices, with the lender moving in an 18 percent range on Wednesday after reporting a larger-than-expected quarterly loss.

Analysts say US President Barack Obama's State of the Union speech has lifted sentiment on regional and global markets, with US markets edging higher overnight and the Japanese Nikkei ending 1.6 percent higher on Thursday.

Dubai's index ended higher for a second day to trim its weekly losses as bluechips rebounded from Tuesday's seven-week lows.

Emaar Properties climbed 4.8 percent and Dubai Financial Market added 6 percent. Arabtec rose 5.1 percent, although it remained below price agreed in a 70 percent stake sale to Aabar Investments and was down 21 percent since this deal was announced in early January.

The index climbed 2.2 percent to 1,599 points, trimming its losses to 3.2 percent this week. Despite the recent gains, analysts say the market is likely to remain in a long-term downtrend until volumes improve.

"It all depends on sentiment and key resistance points - we're talking about Dubai rebounding to move back above 1,600 points, which is to be expected, because this support shouldn't have been broken so easily on the way down," said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments.

"After that, the next target will be 1,700 and I would expect some resistance there to test the real sentiment of the market.

"Turnover is still low, which is worrying. It's better for investors to focus on defensive names rather than the retail-traded stocks."

Qatar Gas Transport Co (Nakilat) was the main gainer as Doha's benchmark bounced back from the previous day's six-month low in line with strength in regional exchanges, which are boosted by improving global sentiment.

Nakilat climbed 3.3 percent, recouping some its losses from a two-day, 4.5 percent decline. Qatar National Bank added 2 percent and Doha Bank rose 2.4 percent. The index climbed 1.4 percent to 6,592 points.

"We note that a bounce off the current support would not be unusual but that rallies will likely be capped by the resistance near 6850," Shuaa Capital wrote in a research note.

Agility lifted Kuwait's index to a higher close as speculators bought into the stock following a recent slump.

Agility climbed 5.3 percent to 600 fils. It fell 12.3 percent in a 13-day slide to Wednesday's close.

"Whenever Agility falls below 600 fils, it attracts speculators who then sell when the stock rises back above this level," said Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait.

Gulf Finance House climbed 4.7 percent, clawing back some of its losses in a two-day, 11-percent drop as day traders again focus on the smaller cap names.

The bluechips were steady, with Zain rising 1.1 percent to ease away from the previous day's 35-week low and Kuwait Finance House adding 1.9 percent.

The index climbed 0.9 percent to 7,035 points.

Bahrain's measure slipped 0.2 percent to 1,472 points.

Oman Cement fell as investors cashed in gains from the previous day's results-inspired surge, weighing on Muscat's index, which ended lower for the first session in four.

Oman Cement fell 2.4 percent as investors booked profits from a similar-sized gain on Wednesday. This surge was sparked by the company saying full-year profit nearly doubled, although fourth-quarter profit missed analysts' forecasts.

Bank Muscat extended gains since reporting its own quarterly earnings, rising 1.8 percent.

"The bank recorded stable growth in net interest income, due to improved margins, despite weaker growth in loans than we had expected," NBK Capital wrote in a research note.

"We also view positively the improved capitalization and high coverage ratios.

Rival lender Bank Dhofar added 2.1 percent. The index fell 0.1 percent to 6,512 points. (Reuters)

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