DUBAI: The Oman and Qatar benchmarks claimed new milestone highs, but trading was mixed on Gulf Arab markets as early morning declines in Asia spurred regional profit-taking.
Gulf indexes were subdued, with none moving by more than one percent. Abu Dhabi rose and Bahrain edged higher, but Saudi Arabia fell for a fifth day as Saudi Basic Industries Corp (SABIC) declined and Dubai and Kuwait also retreated.
“Gulf markets lag other emerging markets and so we’re seeing the region play catch up with the rest of the world,” said Rami Sidani, Schroders Middle East head of investment.
“Oil prices above $70 give a strong boost, but we will see profit-taking along the way, which is typical of any stock market.”
Qatar’s index shrugged off early losses to hit an 11-week closing high, rising for the seventh session in eight as banks advanced, despite volumes falling by almost a third from the day before.
Qatar Telecom (Qtel) surged 4.9 percent to a 49-week high after the firm confirmed it was interested in Portugal Telecom’s plans to sell its stake in Morocco’s second-largest telecoms company, Meditel. Qtel is not included on Qatar’s index.
Abu Dhabi hit an 11-week high after Emirates Telecommunications Corp (Etisalat) climbed 2.4 percent to its highest finish since mid-June.
Etisalat’s gains followed an extraordinary meeting at regional rival Zain, where shareholders of the Kuwait operator voted to remove a cap on share ownership that could pave the way for a stake sale.
In July, Etisalat said it was interested in buying a 51 percent stake in Zain.
“I don’t necessarily think Etisalat’s rise was because of Zain, but that is what the market chatter is saying,” said Ali Khan, managing director and head of brokerage at Arqaam Capital.
“You could argue there was buying because Etisalat’s stock has lagged the market since May. An acquisition is potentially not very good news for the buyer’s stock if the company has to write a large cheque.”
Zain’s shares closed flat, holding steady at the previous day’s 11-month closing high. Its chief executive told shareholders the firm was not in talks to sell a stake in the entire company.
“I believe (Zain’s) current price is exaggerated, with investors trying to price in any developments in the shareholder space,” said Schroders’ Sidani.
“Everything is priced in at current levels. Even if a strategic investor was to pay a premium for a substantial stake in Zain, it does not mean this would benefit minority shareholders.”
Zain’s market capitalisation is $22.1bn, while Etisalat is worth $20.4bn, according to data.
Moribund trading helped drag Saudi Arabia’s index down 0.7 percent, taking its losses to 2.2 percent in the past week.
SABIC fell 1.8 percent and rival Rabigh Refining and Petrochemical Co lost 0.9 percent as a six percent drop in Chinese equities stoked worries about the pace of economic recovery and demand for the Saudi manufacturers’ products.
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