Most Gulf bourses end lower; Kuwait index hits 8-year low

Updated 04 November 2012
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Most Gulf bourses end lower; Kuwait index hits 8-year low

DUBAI: Gulf bourses were mostly lower with political tension weighing on Kuwait, while Saudi Arabia’s measure gained in thin trade.
Kuwait’s index slumped to a new eight-year closing low ahead of a major demonstration planned by the opposition later in the day. The market finished 0.1 percent lower.
The opposition said it would would press ahead with the march to protest against new voting rules, while the government warned it would not tolerate unsanctioned demonstrations. Some protests in recent weeks have seen clashes between police and demonstrators.
“Retail investors were nervous today — we have another protest tonight. But I don’t think too much will happen because a lot of security forces have been sent out,” said a Kuwait-based trader who asked not to be identified.
Nine of the 10 largest stocks by market value closed flat, with smaller stocks facing the brunt of the selling pressure. Government-linked funds were seen buying larger blue chips to support the market during some periods of market weakness last month and investors think they may do so again, though there was little if any such buying noted on Sunday.
National Ranges was the most active stock, falling 2.8 percent. Ithmaar Bank shed 1.1 percent.
“Not many people are selling, trading values are low — people are scared to leave or to enter the market,” said Fouad Darwish, head of brokerage services at Global Investment House.
In contrast to other Gulf countries, few Kuwait companies have so far reported third-quarter earnings, apparently because they want to limit the negative impact from the political tensions on their stocks, he added. They seem to be calculating that politics-related selling is less likely if investors are still hoping for positive third-quarter earnings surprises.
In Qatar, the bourse slipped from its six-week high as investors booked recent gains, with Industries Qatar the main drag. Industries Qatar fell 2.4 percent to 150.9 riyals, down from Thursday’s four-year high — suggesting it has not cleanly broken major technical resistance at the January 2011 intra-day high of 154.50.
If the stock falls on Monday, that will create a bearish engulfing pattern on the daily candlestick chart, a classic sign of the end of an uptrend for the short term.
“IQ’s price is on the upper end, but they are also getting into a lot of projects so the bar will be raised,” said Yassir Mckee, wealth manager at Al-Rayan Financial Brokerage.
“They have the potential to break the 52-week high but trading is a little bit speculative — materialization of the projects will take some time.”
Doha’s index ended 0.5 percent lower at 8,565 points in its largest one-day decline since Sept. 26.
The market’s year-end target is near the 8,600 level, Mckee added.
“Everybody is waiting for the big-ticket projects and new construction but I don’t see that happening this year. People will try to cash in on the (year-end) dividends, so there won’t be a lot of selling.”
Qatar Electricity and Water shed 0.7 percent and Qatar National Bank slipped 0.3 percent.
In the UAE, Abu Dhabi’s measure dipped 0.2 percent, easing away from a 15-month high.
Abu Dhabi Commercial Bank fell 1.5 percent. The lender posted a quarterly profit decline, missing by a considerable margin the forecasts of analysts who had predicted, on average, a 23-percent increase in quarterly earnings.
Dubai’s benchmark closed 0.3 percent lower, trading within a 20-point range since last Monday.
Dubai Financial Market, the only listed Gulf bourse, fell 1.0 percent. It said its third-quarter net loss narrowed to AED 1.7 million ($463,000) from 9.3 million in the same period last year.


China, EU to form group to modernize global trade rules

Updated 46 min 4 sec ago
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China, EU to form group to modernize global trade rules

  • China and the EU agreed to launch a group that will work to update global trade rules
  • Companies worry the US-Chinese dispute could chill global trade and economic growth if other governments respond by raising their own import barriers

BEIJING: China and the European Union agreed Monday to launch a group that will work to update global trade rules to address technology policy, subsidies and other emerging irritants and preserve support for international trade amid US threats of import controls.
Actions such as US President Donald Trump’s unilateral tariff hikes in a technology dispute with Beijing show World Trade Organization rules need to keep pace with changes in business, said an EU vice president, Jyrki Katainen.
Katainen said Europe was not siding with Beijing in its dispute with Trump but was taking action to protect the global system of regulating free trade. He said the EU wants other governments to join the WTO group.
Companies worry the US-Chinese dispute could chill global trade and economic growth if other governments respond by raising their own import barriers. Even before Trump took office, economists were warning countries were tightening import restrictions and taking steps to favor their companies over foreign rivals.
US officials complain the WTO, the Geneva-based arbiter of trade rules, requires an overhaul because it is bureaucratic, rigid and slow to adapt to changing business conditions.
Katainen said Europe wants to focus on issues including subsidies to industry, government pressure on foreign companies to hand over technology and the status of state-owned industry — all areas in which Beijing faces complaints by Trump as well as other trading partners.
“I don’t expect these negotiations to be easy,” Katainen said at a news conference. But if nothing is done, “the environment for multilateral trade will vanish.”
Trump has threatened to impose tariffs of 10 percent to 25 percent on up to $450 billion of Chinese goods. Beijing responded to Washington’s first round of hikes on $34 billion of imports by raising duties on US soybeans, whiskey and other products.
Other governments have similar complaints but Trump has been more direct about challenging Beijing and threatening to disrupt exports.
Beijing might agree to talks to deflect further sanctions but is unlikely to agree to changes that hamper its technology plans, said Mark Williams of Capital Economics.
“I very much doubt they would agree to anything that would have teeth and punish them,” said Williams. Policies companies object to are “integral to the growth model China is pursuing,” he said.
Beijing agreed to narrow its multibillion-dollar trade surplus with the United States by purchasing more American goods but scrapped that after Trump went ahead two weeks ago with a tariff hike on $34 billion of imports.
Beijing also has cut import duties on autos and some consumer goods and promised to remove limits on foreign ownership in its auto, insurance and finance industries.
But the Communist government has resisted any change to its plans that call for challenging US and European technology dominance by creating Chinese companies capable of competing in fields including clean energy, biotech and aerospace.
Chinese officials deny foreign companies are required to give up technology. But in many industries they are compelled to work through state-owned partners, which requires them to share know-how with potential competitors.
One in five companies that responded to a survey by the European Union Chamber of Commerce in China released last week said they felt compelled to hand over technology in exchange for market access.
Trump infuriated US allies — from the EU to Canada and Mexico — last month by imposing tariffs of 25 percent on imported steel and 10 percent on aluminum. He said imports threatened America’s national security — a justification countries use rarely because it can be easily abused.
Beijing has tried to recruit European allies in its dispute with Washington, promising visiting leaders including Germany’s Chancellor Angela Merkel in May to open industries wider to their companies.
On Monday, Premier Li Keqiang, China’s No. 2 leader, told visiting French Premier Edouard Philippe that Beijing would allow more imports of beef and other food from France. Li said French companies were welcome to invest.
“China takes a positive attitude to cooperation with the French side,” Li said.