* Foreign investors still net buyers in Egypt
* Egyptian pound devaluation could aid exporters, economy
* Dubai's Arabtec falls on Qatar Airways airport suit
* Petrochemicals pull Saudi down after 2013 budget
* Oman breaks above technical resistance
By Praveen Menon
DUBAI, Dec 30 Egypt's stock market held up well
on Sunday despite a weak currency, as foreign investors
continued to buy shares - a sign that a devaluation of Egypt's
pound, which looks increasingly likely, might not be a disaster
for financial markets.
The Egyptian pound briefly hit a record low of about
6.30 in interbank trading against the dollar, a fall of roughly
1.8 percent from its previous close. The central bank launched a
system of foreign currency auctions on Sunday in an effort to
conserve its falling reserves.
Many analysts believe authorities may no longer be willing
or able to support the Egyptian pound; in a research note,
Pharos Research forecast a free float would be introduced with
the pound weakening to 6.50. Some analysts have a longer-term
target for the currency of around 6.80.
But the stock market's calm reaction to the currency turmoil
showed the extent to which bad economic news had already been
factored into Egyptian share prices, and also that some
investors - many of them foreigners - remain bullish on the
long-term outlook for equities.
The main stock index ended 0.5 percent higher at
5,442 points, after a 2.2 percent gain on Thursday. Stock
exchange data showed the value of buying by foreign investors,
though small in absolute terms, was more than double the value
of their selling during the day.
The index is up 50 percent from its level at the end of last
year and has regained all of its losses since late November,
when a political crisis erupted over President Mohamed Mursi's
drive to push through a controversial new constitution for the
The passage of the constitution, though still the subject of
bitter protests by the opposition, is being seen as positive by
some investors because it paves the way for parliamentary
elections in about two months. A new parliament could restore
some political normalcy and allow the government to focus on
Prime Minister Hisham Kandil said on Sunday he expected a
resumption of talks in January with the International Monetary
Fund on a $4.8 billion loan, after the talks were suspended
because of the political turmoil.
Depreciation of the Egyptian pound could saddle foreign
investors with currency losses and perhaps encourage more
capital flight in the short term.
But many investors seem already to have factored a weaker
currency into their calculations, and some believe it could
actually be positive for the stock market in the longer term, by
helping exporters and putting the economy on a stronger footing.
"I believe that the rise of the U.S. dollar against the EGP
is reminiscent of what happened in 2003 after the floating of
the EGP," said Mohabeldeen Agena, head of the technical analysis
desk at Beltone Financial.
"This had a positive impact on the Egyptian bourse as the
index rose from 700 points to 12,000 by the end of 2008."
An extended rally from current levels would require the
political situation to stabilise, but nevertheless the stock
index could rise above 5,600 points by the end of the current
week, Agena added.
Gulf bourses ended mixed on Sunday with activity mostly
quiet because of year-end holidays. Dubai's index.
however, ended at a nine-week closing high, up 1.1 percent.
"Investors are betting on good earnings in the fourth
quarter and maybe a good rally next month," said Mohab Maher,
senior manager at the institutional desk for MENA Corp.
Emaar Properties rose 1.9 percent and Air Arabia
climbed 4.3 percent. Property developer Deyaar
advanced 2.9 percent.
Arabtec dropped 0.4 percent after Qatar Airways
said it filed a $600 million legal claim against Lindner Depa
Interiors, a German-Dubai joint venture, for a delay in opening
a new international airport in Doha. Arabtec said in November it
was taking a stake in the venture's parent Depa Ltd.
Meanwhile, Saudi Arabia's index dropped to a
two-week low, more than eliminating gains posted during a rally
on Saturday following the state budget announcement. The index
lost 0.8 percent.
Saudi Arabia on Saturday set a record state budget for next
year as high oil prices allow heavy spending on welfare and
While the news triggered some buying interest in domestic
demand-related stocks, the expansionary nature of the budget was
not a surprise, while the index was dragged down by weak
petrochemical stocks after global oil prices declined. Sector
bellwether Saudi Basic Industries fell 0.8 percent.
Oman's market was strong with the index advancing 0.8
percent to 5,730 points, pulled up by banking stocks as Bank
Muscat gained 2.0 percent.
The index's rise was technically bullish because it broke
resistance at 5,722 points, where the index peaked in October
and November. The next, minor resistance is at 5,800 points,
where the index peaked in June.
* The index added 0.5 percent to 5,442 points.
The benchmark dropped 0.8 percent to 6,824 points.
* The index gained 0.09 percent to 5,947 points.
* The index climbed 1.1 percent to 1,629 points.
* The index added 0.06 percent to 2,627 points.
* The index fell 0.1 percent to 8,300 points.
* The index advanced 0.8 percent to 5,730 points.
* The index rose 1 percent to 1,074 points.