JEDDAH/DUBAI: Most Gulf Arab bourses rose on Tuesday, clawing back losses from sharp sell-offs on the previous day, as strength in Asian and US shares boosted investor sentiment in the region.
“We are seeing a reaction to what is happening in global markets. On Monday we saw profit-taking, correcting the uptrend,” said Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co. in Dubai.
Abu Dhabi was the Gulf Arab region’s biggest gainer with First Gulf Bank climbing 5.3 percent, while in Dubai, Commercial Bank of Dubai jumped 4.8 percent. The main Abu Dhabi index rose 1.2 percent to 3,126 points.
The Dubai benchmark climbed 1 percent to 2,162 points. “We are continuing to see price adjustments. First of all we saw real estate in Dubai and Abu Dhabi leading markets and then the banking sector filling the gap. I believe now we’ll see smaller stocks moving higher to have the same price adjustment,” said Al-Jaouni.
Dubai’s Drake & Scull closed 3.1 percent higher after it said on Monday it won a 130 million dirham ($35.39 million) contract in Thailand.
Another positive day for the Saudi market, which closed with a gain of 52.4 points. The Tadawul All-Share Index (TASI) surged 52.40 points to close at 6,279.47 on Tuesday.
Four sectors saw losses on Tuesday, ranging from 0.09 percent in the Agriculture & Food Industries, to a loss of 0.69 percent in the Media & Publishing sector. On the other hand, the sector gains ranged from 0.07 percent in the Hotel & Tourism industry to a gain of 2.32 percent in the Insurance industry. Overall market breadth was positive, with 89 advancers and 27 decliners giving an AD ratio of 3.30, the Jeddah-based Financial Transaction House (FTH) said in its daily market commentary.
The stock market turnover was over SR4.86 billion on Tuesday.
Meanwhile, Credit Suisse began coverage of Saudi International Petrochemical Co. (Sipchem) with an “outperform” rating and a price target of SR26.14. Sipchem is among the lowest cash cost producers of methanol and butanediol and the firm’s acetyl complex contribution has been underestimated by the market, Credit Suisse said in a note to clients. The brokerage said it expects the firm’s acetyl complex to contribute 57.4 percent to Sipchem’s 2010 revenue and 61.4 percent to its earnings before interest, tax, depreciation and amortization.
The firm’s third-quarter results may demonstrate a weak topline performance from planned overhaul-related shutdowns and any dips in the stock’s price should be viewed as an opportunity to gain exposure to the company, Credit Suisse said. Shares of Sipchem closed 2.63 percent higher at SR21.50 on Tuesday.
Kuwait and Bahrain were the only bourses to close lower. The Kuwaiti index declined 0.1 percent to 7,834 points and the Bahraini index fell 0.2 percent to 1,552 points. “Most investors are waiting on the sidelines for third-quarter results to come out which will give more direction,” said Shahid Hameed, head of asset management for the Gulf region at Global Investment House in Kuwait.
— With input from agencies