Dubai's bourse continued to lead the region up on Wednesday, even though builder Arabtec slowed its advance, while Qatar Gas Transport Co (Nakilat) jumped on strong second-quarter results. Shares in Arabtec, which had surged 13.6 percent on Tuesday, gained 1.9 percent; trading volume fell by a quarter but was still extremely high and again made Arabtec Dubai's most active stock. The Dubai index also added 1.9 percent.
-- MSCI upgrade may mean smaller impact from Ramazan lull
-- Some Qatar firms beat Q2 estimates
-- Saudi Arabia's Ma'aden strong after Q2 earnings
Arabtec's leap on Tuesday followed a board meeting at Abu Dhabi state fund Aabar Investments, which is a big shareholder; investors have been hoping it could raise its stake in Arabtec from the current 18.94 percent, probably by buying part of the 28.85 percent stake held by former chief executive Hasan Ismaik.
Aabar made no announcements after the meeting and declined to comment on its outcome. While a decision by Aabar to raise its stake would please investors by signalling a commitment to Arabtec's future growth, a purchase from Ismaik would not increase market demand for the company's shares. Also, analysts' estimates suggest Arabtec, now at 4.95 dirhams, is once again well above fair value; the median target price of eight analysts surveyed by Reuters is 3.68 dirhams.
However, some other Dubai stocks posted strong gains on Wednesday, suggesting the market can prosper without Arabtec. Bourse operator Dubai Financial Market jumped 5.5 percent and conglomerate Dubai Investments was up 5.0 percent. "People are betting on better financial announcements," Fouad Darwish, head of brokerage services at Global Investment House in Kuwait, said of upcoming second-quarter earnings announcements by Dubai companies in the next few weeks.
"It's very uncommon to see this elevation in traded value, especially during mid-summer and Ramazan, but people believe that we will have a very good second quarter." The upgrade of the United Arab Emirates, along with Qatar, to emerging market status by index compiler MSCI at the end of May has brought in new foreign investors, and this may have made the markets somewhat less susceptible to the usual Ramazan lull, Darwish said.
On Tuesday Dubai's index, last at 4,858 points, triggered an inverse head & shoulders pattern formed by the late June and early July lows, and pointing back up to May's multi-year peak of 5,407 points, which is strong resistance. Abu Dhabi's bourse added 1.2 percent on Wednesday on the back of its bluechip trio of large banks. Abu Dhabi Commercial Bank jumped 3.8 percent, First Gulf Bank rose 1.5 percent and National Bank of Abu Dhabi added 1.0 percent.
Qatar's benchmark rose 0.6 percent. Nakilat, one of the world's largest shippers of liquefied natural gas, was among the main supports, jumping 3.7 percent after posting a 31 percent increase in second-quarter net profit. Islamic lender Masraf Al Rayan rose 1.1 percent after it said it had sold a stake in a local real estate firm to a state fund for 1.53 billion riyals ($420 million), which would generate a gain of 466 million riyals for the bank spread over three years. Shares in Doha Bank jumped 4.2 percent as investors bet on a positive surprise from its second-quarter financial report, expected later on Wednesday.
Saudi Arabia's main index edged up 0.1 percent. Saudi Arabian Mining Co (Ma'aden) rose 2.0 percent after it posted a higher-than-expected nine-fold rise in net profit in the second quarter. Hospital management firm Al Hammadi Company for Development and Investment, which surged its daily 10 percent limit on its first day of trading on Tuesday, did not quite repeat that feat on Wednesday, climbing 9.7 percent. Al Rajhi Bank was the main drag on the index, down 1.2 percent after trimming its proposed cash dividend for the first half of 2014 to 1.0 riyal per share from 1.38 riyals a year earlier as its second-quarter earnings fell 8.2 percent.
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