MIDEAST STOCKS-Kuwait rallies for 8th day, some others stall

Sun Jan 13, 2013 9:25am EST

Related Topics

* Kuwait double bottom points up to 6,350 points

* Petrochemicals drag Saudi down from near resistance

* Bearish engulfing patterns on Qatar, Dubai candlestick charts

* Dubai retreats from near major technical resistance

* Profit-taking hits Egypt but pull-back still moderate

By Nadia Saleem

DUBAI, Jan 13 (Reuters) - Kuwait's bourse rose on Sunday for an eighth straight day, its longest winning streak in 16 months, on the belief that corporate earnings were improving. But some other regional markets ended recent rallies.

The Kuwaiti benchmark climbed 0.7 percent to 6,109 points, its highest close since June 2012. Last week its break of resistance at 6,011 points, the October peak, triggered a double bottom formed by the August and November lows and pointing up to around 6,350 points in coming weeks.

"Overall sentiment is very positive because of Q4 earnings, expectations of better dividends and political stability," said Fouad Darwish, head of brokerage services at Global Investment House.

"The market is trading above the psychologically important level of 6,000, and 6,050 was said to be the crossing point for institutions to start buying."

Last month's parliamentary elections did not resolve political uncertainty in Kuwait or end the conflict between the cabinet and the opposition, but it ushered in a period of relative quiet, and some economic development plans appear to be proceeding.

Last week a GDF-Suez-led consortium won a contract to build and run a 1,500 megawatt gas-fired power and seawater treatment plant in Kuwait, which will make up around 12 percent of Kuwait's installed power generation capacity and about a quarter of its desalination capacity.

Telecommunications operator Zain gained 1.3 percent and rival Wataniya climbed 1.7 percent.

Small-caps dominated trade as retail investors looked for short-term gains. Abyaar Real Estate and International Financial Advisors rose 6.2 and 2.0 percent, becoming the two most heavily traded traded stocks.

That focus of trading on small-caps rather than blue chips was a sign that investors remained wary.

"People are trading stocks that are liquid - there is caution in the market, with some wondering if the current prices are justified," said a Kuwait-based trader who asked not to be identified. "The market has had a good run and some stocks are overdone."

Ahli United Bank rose 6.1 percent as more than five million shares traded. The Bahraini lender sold most of its 33 percent stake in Qatar's Ahli Bank to sovereign fund Qatar Foundation.

The Doha-listed bank fell 2.0 percent, underperforming Qatar's main index, which slipped 1.1 percent from Thursday's nine-month high.

SAUDI

Qatar's index formed a bearish engulfing pattern on the daily candlestick chart, a short-term negative signal. Some other Gulf markets also turned at least short-term negative, often after nearing major resistances.

In Saudi Arabia, the index slipped from a four-month high as petrochemical firms posted estimate-trailing earnings.

Saudi Kayan Petrochemical said its fourth-quarter net loss increased 1.9 percent from the year-earlier period to 194.45 million riyals, citing a jump in cost of sales and other expenses. Shares in the firm fell 4.6 percent.

"The continued increase in losses and Saudi Kayan's inability to report a profit are concerning," Iyad Ghulam, analyst at NCB Capital, said in a note. "We believe this can be attributed to higher feedstock costs and continued operational inefficiencies."

Saudi Arabian Fertilizers Co (SAFCO) fell 0.8 percent after it posted a 10.3 percent decline in fourth-quarter net profit, missing the average analyst forecast.

The kingdom's benchmark lost 0.7 percent, after testing and failing to break its September peak of 7,179 points.

Dubai's benchmark fell 1.3 percent. It closed at 1,733 points, pulling back from near major technical resistance at 1,778-1,793 points, where last year's high, hit last March, coincides with an October 2010 peak. The Dubai index also posted a bearish engulfing pattern.

Emaar Properties and Emirates NBD fell 1.9 and 1.6 percent respectively.

But large-caps helped Abu Dhabi's bourse rise 0.5 percent to its highest close since June 2011. Telecom operator Etisalat and First Gulf Bank climbed 1.0 and 1.7 percent respectively.

The index pulled back sharply from an intra-day high of 2,769 points, however, after it neared resistance on the June 2011 peak of 2,777.

Dana Gas rose 3.9 percent to 0.52 dirhams, its highest close since February 2012. In a Reuters interview, its biggest shareholder last week backed the firm's plans to restructure $920 million of debt.

"There is big room for the stock to go higher - the target price is between 0.68 to 0.72 dirhams," said Ali Adou, portfolio manager at The National Investor. "The default scenario is now behind us. The main challenge is Dana Gas' ability to get its dues from Iraq and Egypt."

The energy firm said last month it received $48 million in overdue payments for fuel supplied in Kurdistan. Dana Gas said in its 2011 results that trade receivables at the end of the year stood at 1.74 billion dirhams ($474 million), of which about 48 percent was owed by Egypt and 52 percent by Kurdistan.

EGYPT

Egypt's measure declined 0.9 percent to 5,701 points, down for a second session from Wednesday's 10-week high.

The market surged about 25 percent over six weeks to reach that high, buoyed by foreign investors rebuilding their weightings in Egypt.

Analysts said Egypt's weak currency and precarious foreign reserve situation were still not prompting heavy selling of stocks. Prime Minister Hisham Kandil said on Sunday that Egypt hoped soon to resume talks with the International Monetary Fund on a $4.8 billion loan, though he spoke of "realigning" the economic reform programme previously agreed with the IMF and it was not clear how easily that could be done.

The main reason for stocks' retreat is that the index has neared important chart resistance, the analysts said. There is minor resistance at 5,894 points, the late October peak, and major resistance at 6,025 points, last year's peak hit in September.

Analysts expect the market to trade between 5,500 and 5,900 points for the time being, before any sustained break above the 6,000 area that would signal another leg up. Immediate, minor chart support is at 5,693 points, the late November peak.

SUNDAY'S HIGHLIGHTS

SAUDI ARABIA

* The index retreated 0.7 percent to 7,115 points.

DUBAI

* The index fell 1.3 percent to 1,733 points.

ABU DHABI

* The index advanced 0.5 percent to 2,742 points.

QATAR

* The index declined 1.1 percent to 8,685 points.

EGYPT

* The index slipped 0.9 percent to 5,701 points.

KUWAIT

* The index climbed 0.7 percent to 6,109 points.

OMAN

The index advanced 0.4 percent to 5,844 points.

BAHRAIN

* The index rose 1 percent to 1,072 points.

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