DUBAI // Investors lifted shares of UAE telecommunications operator Etisalat but punished Saudi chemicals manufacturer Saudi Basic Industries Corp stock after the two blue chip companies reported their quarterly earnings this weekend. Etisalat, the largest telecommunications company in the UAE, led markets higher as strong third-quarter earnings and rumours of bank mergers boosted sentiment among institutional investors.
The firm posted a 19 per cent rise in quarterly profit, a growth level it expects to replicate in the current quarter. Markets in Qatar and Bahrain also gained ground, while bourses in Saudi Arabia, Kuwait and Oman extended declines amid a global market rout. The Saudi market, fell as Sabic reported its first drop in quarterly profit in more than two years on weaker sales for chemicals. Its index closed 3.78 per cent lower at 6,258 points.
"Investors are cautious about the profits of listed companies and their future outlook," said Talal al-Tawari, head of the GCC equities division at Gulf Investment Corp. "What's happening in the global economy is affecting everyone and economies in the region are not immune. Investors are taking a wait-and-see attitude." The benchmark in Abu Dhabi added 2.38 per cent to 3,446 points, after falling almost 7 per cent in the last two days. Banks in Abu Dhabi also gained ground on expectations that new challenges in global finance would encourage consolidation in the sector. National Bank of Abu Dhabi, down more than 17 per cent this month to its close last week, surged 5.96 per cent.
"The trend for the future is consolidation," says Mohammed Yasin, the managing director at Shuaa Securities. Kuwait closed lower for a sixth trading day as investors worried a global financial crisis will take its toll on earnings of financial firms. It fell 2.68 per cent to 11,234 points, extending six days of declines to 5.6 per cent. The Gulf Bank of Kuwait dropped 5.66 per cent ahead of reporting a 13.8 per cent drop in third-quarter profit after trading hours.
Kuwait's central bank and sovereign wealth fund have been trying to rebuild confidence in the financial sector, by cutting interest rates and providing liquidity and the latter by investing in battered stocks. "Most investors are concerned about the investment sector. Markets have been going down regionally and globally since August," says Talal al-Tawari, head of the GCC equities division at Gulf Investment Corp.
Dubai's benchmark 0.37 per cent to 3,215 points. Dubai's index has dropped about 22 per cent this month and is down 46 per cent this year. Emaar Properties advanced 0.72 per cent. After market hours, Emaar reported a 3.3-per cent fall in third-quarter profit as it took a writedown on its US unit. "Some local institutions are building positions slowly. The Gulf is one of the safest regions in the world and the drop in the market has far exceeded any possible drop income from the financial crisis," said Mohammed Yasin, managing director at Shuaa Securities.
Shuaa Capital's stock tumbled 8.49 per cent after it reported a quarterly loss on Friday due to a writedown related to the collapse of Lehman Brothers. Qatar's benchmark snapped two days of declines on institutional buying in blue chips, gaining 1.25 per cent to 7,901 points. Industries Qatar rose 1.93 per cent. Foreign institutions are buying some blue chips, but selling pressure remains strong as investors seek to book profits quickly, said Amro Motasim, chief trader at Ahli Bank.
"Everyone is afraid. People are liquidating positions right away. The buying is not enough to withstand the market," Mr Motasim said. The Doha benchmark rallied to a more than two and a half year high in June before falling about 38 per cent. Oman's main index closed lower for a third day in a row, shedding 0.35 per cent to 7,223 points. It has dropped more than 40 per cent since hitting a life high above 12,000 points on June 12.
* With Reuters