Reuters/Dubai
Saudi Arabia’s bourse slipped off a 15-month high yesterday as earnings misses from petrochemical firms spurred profit-taking, while other regional markets were mixed.
Qatar’s benchmark index ticked up 0.01% to 9,399 points yesterday.
The kingdom’s petrochemical sector index lost 0.9%, underperforming the wider benchmark, which declined 0.6%.
Saudi Basic Industries Corp (Sabic), the world’s largest chemicals producer, fell 1.3% after two of its units posted below-forecast net profit for the second quarter.
Sabic’s earnings, which are yet to be released, will feel a slight pinch from its subsidiaries’ underperformance.
Yanbu National Petrochemical Co (Yansab) declined 1.7% and Saudi Arabian Fertiliser Co (Safco) retreated 0.2%.
Petrochemical companies, such as Safco and Yansab, have little upside due to stretched valuations, analysts said.
“Safco was substantially below our estimates because urea prices were low in Q2 and Yansab was also unable to beat expectations,” said Muhammad Faisal Potrik, research analyst at Riyad Capital. Riyad Capital has a ‘hold’ recommendation on both stocks.
Potrik however said the outlook for the sector is stable, providing oil prices stay above $100 a barrel.
The banking sector’s index slipped 0.9%, as investors booked gains after most lenders posted solid profit growth for the second quarter.
In Kuwait, the index slipped 0.8%, trimming 2013 gains to 31.8%. The move extends a steady decline in the retail-dominated market since it hit a multi-year peak in late-May.
Retail investors tend to cash out in Ramadan, the month of fasting, in preparation for holidays at the end of the holy month.
Trading volumes were their lowest in 2013 yesterday, showing little reaction to a ruling by the administrative court that threw out legal challenges to a parliamentary election set for July 27.
Swift parliamentary elections are seen a positive for the country’s long-delayed $30bn development plan, analysts said.
In the UAE, the two main markets hit fresh multi-year highs on optimism companies will report strong profit growth in their upcoming second-quarter earnings.
Dubai’s index climbed 0.7%, extending 2013 gains to 51.4%. It is one of the best-performing markets globally this year.
Shares in budget carrier Air Arabia rose 5.1% to 1.23 dirhams ($0.33). “There was a strong buying flow after it crossed major resistance at 1.2 dirhams,” said Mohab Maher, senior manager of institutional desk at Mena Corp. Expectations of strong second-quarter earnings are also pushing up the market as a whole, he added.
Abu Dhabi’s benchmark advanced 0.8% to hit a fresh 57-month high, as financial stocks supported. Union National Bank, which rose 3.7%, closed above 5 dirhams for the first time since the third quarter of 2008.
In Oman, Bank Muscat gained 1.2% after posting an 8.9% increase in second-quarter net profit. The stock outperformed the wider market, which rose 0.7%.
Elsewhere, Egypt’s index edged up 0.09% to 5,314 points, while Bahrain’s gauge gained 0.1% to 1,187 points.
