Gulf Markets Edge Up as Oil Link Weakens

By Olzhas Auyezov

DUBAI, Jan 13 (Reuters) – Gulf stock markets were volatile on Tuesday as oil prices hit new lows, but most bourses eventually edged up on the back of positive corporate announcements and expectations, continuing a trend towards partially decoupling from oil.

Brent crude fell to its lowest level in almost six years and traded below $46 per barrel on Tuesday as the United Arab Emirates defended OPEC’s decision not to cut output to tackle a glut in the market.
Most Gulf bourses opened lower against that background, but then moved into positive territory even as oil plunged further.

“The markets fell very steeply in the fourth quarter and hence investors think there is value in this market,” said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.

“People think that the oil price decline is nearing its end,” he said, adding however that volatility was likely to persist until oil indeed found a clear floor.

Saudi Arabia’s stock index edged up 0.7 percent as petrochemicals were nearly flat while banks extended their gains after a series of strong fourth-quarter results.

Shares in Samba Financial Group, the kingdom’s fourth-largest bank by assets, jumped 4.5 percent after it posted a 22.5 percent rise in its fourth-quarter net profit, beating analysts’ forecasts.

The lender made 1.23 billion riyals ($328 million) in the quarter, while analysts surveyed by Reuters had expected it to post an average of 1.09 billion riyals.

Bank Aljazira added 1.3 percent after its fourth-quarter profit rose 32.7 percent to 199 million riyals, beating analysts’ average estimate of 178 million riyals.

Among losing stocks, Saudi Arabian Fertilizer Co slid 1.6 percent after reporting a 3 percent drop in fourth-quarter net profit to 779 million riyals, below the average forecast of 893 million riyals.

Dubai’s index rose 1.7 percent as the two most traded stocks, developer Emaar Properties and builder Arabtec Holding, jumped 4.2 and 3.7 percent respectively.

Investment bank SHUAA Capital surged 3.3 percent after the firm said its unit Gulf Finance Corp had raised a 500 million dirham ($136.1 million) loan which will be used to fund its growth in the United Arab Emirates and Saudi Arabia.

Abu Dhabi’s benchmark rose 1.4 percent as blue-chip lenders National Bank of Abu Dhabi and Abu Dhabi Commercial Bank climbed 4.5 and 4.4 percent respectively.

Qatar edged up 0.2 percent amid a mixed performance. Industries Qatar, which had tumbled in the previous two sessions after its board proposed a lower-than-expected 2014 dividend, stabilized and inched down just 0.07 percent.

The Bahraini market slipped 0.6 percent, dragged down by Aluminum Bahrain, which dropped 2.9 percent after Bahrain’s cabinet decided to raise prices of natural gas sold to industrial users.

Bahrain’s state finances are weaker than those of neighboring Gulf oil exporters, so low oil prices are putting heavy pressure on its budget; cutting gas subsidies is one way to raise money.

Egypt

Meanwhile, the stock market in oil-importing Egypt continued to outperform the broad Middle East region and jumped 2.2 percent in a broad rally.

GB Auto, the country’s biggest listed vehicle assembler and distributor, led gains as it surged its daily 10 percent limit for the second day in a row.

The firm’s chief executive told Reuters last week that it was working on a rights issue and planned to invest $1.5 billion to build two new factories. On Monday, the firm said the rights issue would be worth 960 million Egyptian pounds ($134 million).

Property firm Medinet Nasr Housing surged 5.3 percent after reporting a block trade in its shares. At 152,790 shares, the trade represented a stake of less than 0.08 percent.

However, it followed an announcement in late December of a bigger deal in which Beltone Investment Group increased its stake in Medinet Nasr Housing to 24.15 percent.

Shares in El Sewedy Electic surged 9.8 percent. The firm said last week it had won a government contract to build two power stations in Egypt.

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