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Stock markets in the United Arab Emirates retreated from multi-year peaks on Thursday, while Saudi Arabia edged up and Bahrain’s benchmark hit its highest level in three years. Dubai’s main index slid 0.9 percent in a volatile session during which was down as much as 4.0 percent. Emaar Properties was the main drag after its annual meeting on Wednesday dashed some investors’ hopes for a 2013 dividend hike beyond the board’s proposal; the stock fell 1.4 percent.
Other property and construction stocks also fell, with the exception of builder Arabtec Holding, whose shares were extremely volatile but closed up 0.3 percent. Arabtec soared 10.7 percent on Wednesday after the company outlined ambitious expansion hopes and presented new projects at a major real estate exhibition in Abu Dhabi. But analysts said the stock’s dynamics had become unpredictable and it had surpassed some major brokers’ fair value estimates.
Apart from Arabtec, the only major stocks to rise on Thursday were lender Emirates NBD and bourse operator Dubai Financial Market, up 1.0 and 0.5 percent respectively after both companies reported strong first-quarter earnings. Emirates NBD, Dubai’s largest bank, said on Thursday that first-quarter net profit rose 25 percent to 1.04 billion dirhams ($284 million), while analysts had expected 904 million dirhams on average.
DFM also beat expectations as quarterly net profit surged eightfold to 215.1 million dirhams. Analysts at HSBC and Global Research had expected 202 million and 109 million dirhams. The Dubai market has risen some 50 percent this year, making it the world’s best-performing stock market, and many fund managers think a downward correction is due sometime in coming months. Thursday’s volatility could be a signal of that, but so far, bullish retail investors have always come in to buy on dips. So it is not clear if any sustained pull-back is starting.
“I think in the case of Dubai the market has risen very sharply without any significant correction and the correction was due,” said Shakeel Sarwar, head of asset management at Securities Investment Co (SICO) in Bahrain. In Abu Dhabi, developer Aldar Properties, down 6.1 percent, was the main drag on the UAE capital’s index which slipped 0.8 percent. Shares in First Gulf Bank rose 1.1 percent after it posted a 27 percent rise in first-quarter profit to 1.33 billion dirhams, exceeding an average analyst forecast of 1.23 billion dirhams.
Saudi Arabia’s bourse ended a three-day decline and edged up 0.1 percent. Food producer Almarai was the main support, rising 4.7 percent to 67.50 riyals after NBK capital raised its fair value estimate for the stock by 5 percent to 78.00 riyals. Shares in Kingdom Holding, the investment firm owned by billionaire Prince Alwaleed bin Talal, which this week reported a 14.8 percent increase in first-quarter net profit, jumped 8.0 percent.
Bahrain’s bourse hit a three-year high of 1,419 points, gaining 1.4 percent on the back of Arab Banking Corp (ABC), which jumped its daily limit of 10 percent. Sarwar from SICO Bahrain said relatively cheap valuations of Bahraini companies were attracting bargain-hunters who were not afraid of low liquidity in the local market.
Copyright Reuters, 2014