Banks helped the Saudi bourse rise for a fourth straight session on Monday, while political worries dragged Egyptian stocks lower for a second day and most Gulf markets also fell. The Saudi banking index jumped 1.2 percent to its highest level since April 2010 on upbeat sentiment sparked by improving market conditions.
Banks' profits rose 26.6 percent year-on year and loan growth was 11.1 percent, while deposits increased 11.5 percent in February compared to the same period last year, according to data in a report by the Saudi Arabian Monetary Agency. Heavyweight Al Rajhi Bank rose 2.2 percent and Samba Financial Group climbed 1.9 percent. Investors showed little concern after the chairman of Jeddah's Chamber of Commerce, Saleh Kamel, warned of a market collapse following a sharp rally in recent weeks. He called for a ban on banks lending to investors trading shares, according to newspapers. "Margin lending is nowhere near as large as was the case in 2004 and 2005 and banks are generally adopting a more cautious approach than the regulatory requirement," said Paul Gamble at Jadwa Investment. The index climbed 0.3 percent to a new three-and-half year high, taking to 21.3 percent its gains this year.
In Egypt, the main index fell 1.1 percent, down for a second day, as tensions rose between the ruling army and the Muslim Brotherhood, and as Islamists and liberals battled over the make-up of an assembly that is to write a new constitution. Investment bank EFG-Hermes dominated trading and leapt 9.4 percent after saying it is discussing a possible merger with Qatar's QInvest. "That's the only positive news around a gloomy picture in the market," said Mohamed Radwan at Pharos brokerage.
Among decliners, Pioneers Holding dropped 2.4 percent and Egyptian Resorts 1.7 percent. "There is deterioration on the political scene. Several factors are shrinking appetite for the market," said Chamel Fahmy, also of Pharos. In Oman, banks dragged the index down 1.5 percent, its largest daily loss since August, after the central bank moved to cut the maximum interest rate for bank-issued personal loans to 7 percent from 8 percent from April.
Bank Muscat dipped 3.2 percent and accounted for a third of all shares traded. Bank Dhofar slipped 3.3 percent and National Bank of Oman fell 3.9 percent. "Bank Muscat can manage to survive with some liabilities re-pricing to improve margins and also build on volumes to compensate for any lost margin," said Harikumar Varma at Gulf Baader Capital Markets. "The impact would be more on the smaller banks like Bank Dhofar and Bank Sohar..."
Oman International Bank fell 0.4 percent a day the central bank approved its merger with HSBC Holdings' Oman operations. Qatar's index bucked the regional trend, rising 0.3 percent to a three-week high, as it catches up with early-year gains on other Gulf markets.
"There is a repositioning of money from other (Gulf) markets the chances of a (Qatar) catch up is high so investors don't want to miss any potential rally," said Marwan Shurrab at Gulfmena Investments. Islamic lender Masraf Al Rayan rose 1.5 percent. Industries Qatar gained 1 percent and Commercial Bank of Qatar advanced 0.9 percent. In Dubai, investors booked recent gains, with the index closing 0.8 percent lower and trimming to 22.3 percent its gains in 2012. The benchmark has moved within a 50-point range in the past seven sessions after an early-year spurt. Emaar Properties dipped 1 percent and lender Emirates NBD shed 1.3 percent.