Dubai stocks hit 2-year high

Updated 18 January 2013
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Dubai stocks hit 2-year high

DUBAI: Dubai’s bourse climbed to a new two-year high yesterday as investors shifted funds to stocks lagging an early-year rally, while other regional markets closed mixed.
In Dubai, contractor Drake & Scull jumped 5.6 percent and builder Arabtec gained 4.2 percent. Dubai Financial Market surged 6 percent.
“Local flows are going into stocks, like DSI, which were lagging compared to the market rally last week,” said Mohab Maher, senior manager — institutional desk at MENA Corp. “Foreign buying is also supporting (but) this is likely for short-term gains.”
Emirates NBD hit an 11-month high, rising 1.5 percent. The bank is trading at a price-to-book value of 0.53, while the other big lenders in the United Arab Emirates are above 1, according to Reuters data.
Traders said these indicators are a trigger for investors to buy ENBD shares.
Dubai’s index rose 1.9 percent to 1,775 points, its highest close since November 2010 and up 9.4 percent so far in January.
The market is close to completing a major technical reversal pattern — an inverse head-and-shoulders pattern — which, if successful, means a strong move higher.
“Currently the neckline is located at 1,785 level, which is considered being a tough resistance - the breakout of the neckline should occur on high volumes to confirm the pattern and confirm that the UAE markets will witness an extremely bullish move targeting 2,200 and 2,400 in the intermediate term,” said Musa Haddad, head of investment advisory services at National Bank of Abu Dhabi.
In Abu Dhabi, the benchmark slipped 0.1 percent, down for a second session since Tuesday’s nine-month high.
National Bank of Abu Dhabi and First Gulf Bank shed 0.9 and 0.8 percent respectively.
Elsewhere, Qatar’s index gained 0.5 percent, up 3.1 percent so far in January.
Shares in Vodafone Qatar advanced 4.6 percent to 8.84 riyals per share. The telecom operator reported a narrowing third-quarter loss on Wednesday.
“Vodafone Qatar reported solid December metrics that beat ours and consensus estimates — the beat was on the back of strong subscriber growth,” QNB Financial Services said in a research note. “We maintain our ‘accumulate’ rating with a price target of 9.36 riyals.”
In Egypt, the index slipped 0.5 percent as selling pressure from Egyptians and non-Arab foreigners increased, according to bourse data. Arab investors were net buyers.
The market is still up 3.6 percent so far in January.
Talaat Moustafa, losing 4.7 percent, was the main drag on the index. Investors booked profits from Wednesday’s rally triggered by a court postponing a case over the disputed sale of land for the property developer’s flagship Madinaty project until April 16.
Shares in National Societe Generale Bank bucked the market trend and gained 0.5 percent. Qatar National Bank, which hopes to complete the purchase of a 77 percent stake in the Egyptian lender within the next two months, said it would not be deterred by a currency crisis in the North Africa country.
QNB shares on Doha’s exchange gained 0.5 percent.
In Oman, Bank Muscat ended 0.2 percent lower, trimming January’s gains to 4.8 percent. Oman’s largest bank posted a 15.1 percent rise in fourth-quarter net profit, which came in line with analysts’ forecasts.


Gulf exporters to reap oil dividend as battle for Asia market share heats up

Updated 36 min 59 sec ago
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Gulf exporters to reap oil dividend as battle for Asia market share heats up

  • Chinese exports to US fall
  • IEA ups demand forecast

LONDON: China is expected to buy more oil from Saudi Arabia and other Gulf producers as it seeks to replace US supply amid a worsening trade war with Washington.
Although China last week omitted US crude from a list of a retaliatory tariffs, analysts told Arab News that the Chinese were cutting forward orders for US oil in case the trade war escalates.
Richard Mallinson, co-founder of London consultancy Energy Aspects, said: “Chinese buyers, anticipating that crude and LNG could go on the list if tensions escalate further, are looking to alternative sources.”
Mallinson said that Chinese buyers wanted to avoid having significant amounts of US oil sitting on tankers in the middle of the ocean, which would be hit with tariffs when unloaded at Chinese ports.
“There is definitely an opportunity for Middle East producers here, and particularly the biggest, Saudi Arabia,” he said.
Andrew Critchlow, head of energy news (EMEA) at S&P Global Platts, told Arab News that there was every likelihood of more demand from China for non-US oil and “Saudi Arabia and other Gulf Cooperation Council countries were the place to get it.”
OPEC already provides 56 percent of China’s oil imports, according to the International Energy Agency (IEA). The US has also been exporting increasing levels to the Asia powerhouse.
A report by the Houston Chronicle on Aug. 13, said that US crude exports to China surged from about 22,000 barrels per day (bpd) in 2016 to almost 400,000 bpd last year and early in 2018, accounting for about 20 percent of all US crude shipments.
This summer, those volumes fell below 200,000 barrels daily, said the report.
Critchlow said that the Kingdom was currently producing about
10.5 million bpd with spare capacity of around 2 million bpd, although the closer you get to that number, the more difficult it was to extract and process, he said.
Russia could also ramp up production, but not as much as KSA, said Critchlow.
“We now have the IEA upping its demand forecast for 2019. They have increased their OPEC barrels estimate by a few hundred thousand barrels a day and by half a million a day by 2019 (for the OPEC 15),”
he said.
But the scope for increased global export potential from the Gulf was also being driven by anticipated tighter supply after the reimposition of US sanctions against Iran later this year.
Still, there was a danger of demand erosion the longer the trade wars continued, and especially if there was further escalation.
Shakil Begg, head of Thomson Reuters oil research in London, warned that by the second half of 2019, global GDP could be cut if world trade levels contracted.
That would lead to a sharp fall in the price of crude, and even herald a US recession that could spill into Europe, he told Arab News.
But Critchlow made the crucial point that the big competition in the oil market today “is to win a bigger share of the Chinese and Asian market, including India.”
He said: “That’s where the battle for market share will take place over the next decade. Also, as Iranian barrels are lost, customers in nations such as China, South Korea, India and Japan will look to the GCC and others to step in.”
US exporters will still be a big force to be reckoned with, he said. The IEA has predicted that the US will overtake KSA and Russia as the largest producer by as early as 2019.
Mallinson said: “At the end of this year and the beginning of next, the market is going to get extremely tight. And the Saudis will have to pump at much higher levels.
“When you’ve got buyers restricted from where they go, it does create alternatives to move upwards,” said Mallinson.
But he warned that if the trade war worsens, it could hobble economic growth.
“These are the two largest economies in the world and it is not good news for them getting into a conflict like this.
“But even with a severe economic slowdown, we still see a tight oil market next year. Iran and sanctions are the biggest driver.”
Mallinson said that there were two other constraints: Underinvestment in capital projects outside the US, and infrastructure bottlenecks
in America.
“Those factors are big enough on the supply side to outweigh the possibility of a sharp slowdown of growth on the demand side,” he said.