Key Tadawul index gains 0.2%; SABIC most traded stock

JEDDAH: Most Gulf stock markets rose on Wednesday after Brent oil steadied above $50 per barrel and strong profit growth at Dubai real estate developer DAMAC sparked buying in that market.
The main Saudi Tadawul All Share Index edged up 0.2 percent. Petrochemicals giant Saudi Basic Industries, which had tumbled this week tracking oil’s drop, rose just as much and was the most traded stock in Riyadh.
Some other beaten-down petrochemicals stocks also rose. Saudi International Petrochemical Co, which had fallen 8 percent this week, climbed 1.6 percent.
Most banks gained, led by leading retail lender Al-Rajhi, which added 1.0 percent. A US Federal Reserve official said on Tuesday that the central bank was close to raising interest rates, a move which is likely to be followed by Saudi Arabia because its riyal is pegged to the dollar.
A significant part of Saudi banks’ funding comes from demand deposits bearing no interest, so higher rates could boost their margins — though they could also slow lending growth.
In other sectors, telecommunications operator Etihad Etisalat (Mobily) fell 1.3 percent, extending to 11.5 percent its decline since the firm revised earnings for more than two years and posted a second-quarter loss this week.
Dubai’s index rose 1.7 percent, with DAMAC accounting for almost a third of total traded value, jumping its daily 15 percent limit to a record high of 3.68 dirhams.
DAMAC said its second-quarter profit more than tripled to 1.42 billion dirhams ($387 million). It also announced an interim dividend of 10 percent cash and 10 percent bonus shares. The cash payout will be its first since it listed in Dubai in January.
DAMAC’s performance appeared to inspire fresh speculative rallies in property-related sectors. Mortgage lender Amlak Finance also surged 15 percent, while builder Arabtec rose 6.6 percent.
Neither of the two companies has announced any material developments, although Arabtec on Wednesday denied media reports that its talks with Egypt’s government about a $36 billion housing project had fallen through. The firm said negotiations, which began more than a year ago, were still under way.
Du, the UAE’s second-biggest telecommunications operator, rose 1.7 percent after the company reported an 8 percent fall in second-quarter net profit, which was in line with analysts’ estimates. It also proposed a special dividend payment.
Abu Dhabi’s bourse edged up 0.6 percent and energy firm Dana Gas, which had earlier tumbled 18 percent from its July peak in response to oil’s weakness, surged 5.6 percent.
Developer Aldar Properties jumped 2.3 percent.
The firm reported an 18 percent increase in second-quarter profit on Tuesday but the stock fell on that day as oil’s drop hurt sentiment across the Gulf.
“Whilst the recent correction in oil prices and weakening of the euro could be of concern for the overall UAE economy, we do not expect any significant impact on Aldar as such,” Harshjit Oza and Allen Sandeep of Egypt’s Naeem brokerage said in a note.
Qatar’s index, up 0.2 percent, lagged behind the UAE markets, held back by in part by Gulf International Services, which slid 1.8 percent. The firm posted a 9.2 percent fall in second-quarter profit to 249.7 million riyals ($68.6 million), missing the estimate of QNB Financial Services, which had forecast 279 million riyals.
Egypt’s market fell 0.8 percent, giving up early gains as heavyweight Commercial International Bank dropped 2.7 percent and a number of property stocks pulled back after rallying earlier in the week.
Most selling pressure came from non-Arab foreigners as the dollar’s gains on the Fed comments put pressure on emerging markets across the world.
However, Juhayna Food Industries surged 6.4 percent after the firm said a travel ban imposed on its chairman Safwan Thabet in a crackdown on Mubarak-era business tycoons had been lifted.