Emaar Malls weighs on Dubai; Sabic down before earnings

A general view taken on July 19, 2009 shows the headquarters of Sabic in Riyadh. Saudi Arabia’s index inched down 0.1% yesterday and Saudi Basic Industries Corp, down 1.7%, was the main drag.Reuters/DubaiGulf stock markets traded in a narrow range yesterday as the operator of the region’s biggest mall in Dubai slightly missed earnings forecasts and other bourses lacked strong positive catalysts. Dubai’s index was virtually flat, while Emaar Malls Group (EMG), which operates Dubai Mall, and its parent Emaar Properties fell 1.5% and 0.5% respectively. EMG reported a 43% rise in second-quarter net profit to 412mn dirhams ($112.2mn). Investment bank EFG Hermes had forecast EMG would make 445mn dirhams and Naeem brokerage had expected 425mn. Quarter-on-quarter, EMG’s net profit fell 5%. But Naeem said the earnings miss had not changed its fundamental view on the company—which it rates as a “hold”—and its current valuation looked fair. “We were expecting some sort of a moderate quarter-on-quarter weakness, and believe that the earnings miss is likely to have come from higher operating costs/overheads,” Naeem commented. “Overall, we believe that EMG has fared quite well, despite the ongoing macro headwinds such as falling crude prices, and a weaker euro, which we believe has had some sort of an impact on Dubai tourism.” Among other stocks, logistics firm Aramex rose 0.6%, extending gains on an expected fall in diesel prices due to UAE domestic fuel price reforms announced on Wednesday. Union Properties added 0.8% after saying on Wednesday it planned three new projects worth 2bn dirhams. Abu Dhabi’s bourse slipped 0.1% and that emirate’s biggest developer, Aldar Properties, fell 1.4%. But Abu Dhabi Islamic Bank added 0.8% after beating estimates with a 10.5% rise in second-quarter net profit. It made 502.6mn dirhams, while analysts polled by Reuters had forecast an average of 484mn dirhams. The bank also announced a rights issue on Thursday. Saudi Arabia’s main index inched down 0.1% and Saudi Basic Industries Corp, down 1.7%, was the main drag. The company is expected to report second-quarter earnings on Sunday and some of its subsidiaries have already posted their own results. Yanbu National Petrochemical Co and Saudi Arabia Fertilisers Co have both reported year-on-year declines in second-quarter earnings, although the falls were not as big as some analysts had expected. Electrical Industries Co fell 2.8% following a 55% drop in second-quarter profit. The top gainers yesterday were insurance companies United Cooperative Assurance, up 5.2%, and Buruj, which surged 4.7%. Both companies have posted second-quarter profits that compared with losses in the same period of 2014 and were significantly higher quarter-on-quarter. Most other stocks in the sector also rose and the insurance sector index climbed 1.6%. Foreign fund flows in the Gulf often reflect announced or expected shifts in stock weightings assigned by index compilers such as MSCI and FTSE. Etisalat, the UAE’s former telecoms monopoly, said last month that restrictions on who could own its shares would be partly lifted, opening the Gulf state’s largest stock to foreign and institutional ownership for the first time. If this helps it win a place in MSCI’s emerging markets index, other stocks in the UAE and Qatar may see outflows of money as their weightings decrease accordingly.Elsewhere in the Gulf, Kuwait’s index edged down 0.2% to 6,287 points, while Bahrain’s index added 0.4% to 1,337 points.