Saudi shares extended their rally into a 13th session on Monday with developer Dar Al Arkan jumping after saying its real-estate holdings were upgraded, as most Gulf bourses gained. The kingdom's benchmark inched up 0.03 percent to a fresh 42-month high. Shares in Dar Al Arkan surged 5.9 percent in heavy trading to their highest close since January 2011.
The developer said in a statement on Monday that unnamed international and local firms re-evaluated its real estate portfolio at a premium of 53 percent to its book value of 9.7 billion riyals ($2.59 billion). "They had a lot of land bought a few years ago and kept at cost value on the books," said a Riyadh-based investment manager who asked not to be identified.
"For sure, with a re-evaluation, the price will increase by 40-50 percent, but the real estate market is hot right now and prices could also fall." Zain Saudi jumped 8.4 percent and Saudi Cement climbed 3.5 percent. Banks limited gains on the index, with heavyweight al Rajhi Bank slipping 3.4 percent from Wednesday's one-year high after going ex-dividend. The lender approved a cash dividend of 2 riyals per share for the second-half of 2011. Samba Financial Group fell 1.5 percent and Arab National Bank dipped 1.3 percent.
But bank stocks remain attractive, fund managers say. "The current financial position of Saudi banks is much better than where it was three years ago," said Mateb Al Ghanim, portfolio manager at Amlakuna Investment Group. "The return on lending has grown significantly this year in comparison to its negative growth performance since 2006. And a large number in demand deposits gives a lot of room to expand lending."
In Dubai, the index hit a 27-month high, but closed flat. Contractor Arabtec shed 2 percent. Abu Dhabi's Aabar Investments increased its holding in the Dubai builder to 5.28 percent, according to a regulatory filing. "Usually such turnover is an indication of current prices peaking or fresh money coming in at these levels which indicates further upside," said Marwan Shurrab, chief trader at Gulfmena Investments.
"Price levels are still extremely attractive and there is a reluctance to sell at current levels, but it doesn't make sense for the market to not correct. Caution is required." Abu Dhabi's benchmark dipped 0.6 percent, down from Sunday's seven-month closing high as investors booked profits. In Qatar, the index ended 0.2 percent lower, with Barwa Real Estate the main drag.
Shares in the developer fell 5.4 percent. It said on Monday its 2011 full-year net profit fell by 8.9 percent to 1.29 billion riyals ($354.35 million. Qatar Telecom gained 1.3 percent after its quarterly earnings rose 32 percent. Qtel's board recommended a 3 riyals cash dividend per share, a 30 percent bonus share distribution, and a 40 percent rights issue at 75 riyals per share. "The results are much better than anticipated and what they're offering now in terms of dividends - nobody can beat that," said Yassir Mckee, wealth manager at Al Rayan Financial Brokerage. "Qtel is still a good buy, even though it's a little bit overpriced.
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