MIDEAST STOCKS-Saudi shares drop on real estate concerns; Gulf mixed

DUBAI Tue Dec 3, 2013 9:44am EST

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DUBAI Dec 3 (Reuters) - Saudi Arabia's bourse dropped on Tuesday as concerns over local real estate sector triggered a market-wide sell-off that analysts say could be the start of investors shifting to more attractive opportunities in neighbouring property sectors.

Shares in Dar Al Arkan tumbled 7.5 percent and its peers also fell, which pushed the real estate sector index down 3.2 percent.

The main benchmark, which hit a five-year high on Nov. 18, fell 1.3 percent to trim year-to-date gains to 21 percent and it's lowest closing level since Nov. 6.

"The correction is across the board - the market was reading into talks about property projects being cancelled since 2010 in Saudi Arabia," said John Sfakianakis, chief investment strategist at Saudi investment firm MASIC.

Sfakianakis said investors were looking for a trigger to book recent gains and that there is no evidence of a pull-back in projects with hundreds in billions of dollars being spent in 2013 alone on new projects.

Banking shares were also hit by profit-taking with the sector losing 1.2 percent.

Hesham Tuffaha, a Riyadh-based fund manager, said that valuations of Saudi property stocks are not attractive compared to regional stocks after Dubai was chosen to host the World Expo 2020 and the expectations of increased real estate projects.

He also said that Qatar is looking more attractive on the back of planned developments for the FIFA World Cup 2022.

In Dubai, the index gained 0.3 percent to a fresh five-year high. It recouped early-session losses as a bout of profit-taking proved short-lived. The market is up 83.3 percent year-to-date.

Shares in Union Properties jumped 5 percent and thinly traded heavyweight lender Mashreq surged 13.5 percent.

Abu Dhabi's benchmark climbed 0.6 percent to its highest since August 26.

"We've had a strong surge in Dubai this year, but valuations are not expensive and just above historic levels," said Sebastien Henin, portfolio manager at The National Investor. "The current environment plus the visibility should justify premium valuations," he added referring to the bullish outlook for UAE after Dubai's successful expo bid.

"We could have a breather but the outlook for the medium-term is positive, which should help the market close above current levels by year-end," Henin said.

Elsewhere, Oman's index slipped 0.2 percent, while Kuwait, Qatar and Egypt were little changed.

TUESDAY'S HIGHLIGHTS

SAUDI ARABIA

* The index slipped 0.3 percent to 8,301 points.

DUBAI

* The index gained 0.3 percent to 2,994 points.

ABU DHABI

* The index climbed 0.6 percent to 3,920 points.

EGYPT

* The index rose 1.4 percent to 6,268 points.

OMAN

* The index advanced 0.2 percent to 6,771 points.

QATAR

* The index ticked up 0.05 percent to 10,371 points.

KUWAIT

* The index eased 0.07 percent to 7,742 points.

BAHRAIN

* The index slipped 0.3 percent to 1,198 points. (Editing by Sami Aboudi)

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