* Reduction in Fed stimulus possible as soon as October
* Some funds selling ahead of Q3-end
* IPO speculation weighs on Qatar
* Dubai bucks downtrend but near major chart barrier
* Most foreigners still staying out of Egypt rally
By Nadia Saleem
DUBAI, Sept 22 Renewed worries about the
possibility of U.S. monetary tightening caused most Gulf stock
markets to drop on Sunday, while Egypt rose on the back of an
interest rate cut by its central bank.
Like other markets around the world, Gulf bourses rose last
week in response to the U.S. Federal Reserve's surprise decision
to maintain its monetary stimulus. But on Friday, St. Louis
Federal Reserve Bank President James Bullard said in an
interview on Bloomberg TV that a start to winding down the
stimulus was possible in October, depending on economic data.
So the euphoria surrounding last week's Fed decision is
fading quickly. Although the booming Gulf is less vulnerable
than most regions to tighter U.S. monetary policy, its markets
are near multi-year peaks that were hit in August, leaving them
vulnerable to profit-taking.
"Renewed talk that the Fed could be slowing down the
stimulus and the U.S. markets are affecting us - foreigners are
cutting positions," says Yassir Mckee, wealth manager at Al
Rayan Financial Brokerage in Doha. "Some are selling now to show
cash on the books, because it's almost the end of the third
Qatar's main index fell 0.9 percent, trimming its
year-to-date gains to 17.1 percent. Telecommunications operator
Ooredoo was the main drag, falling 1.9 percent.
Mckee said speculation that state-run Qatar Petroleum might
list its units on the exchange was prompting some local
investors to sell stocks and hold cash in order to buy into a
possible initial public offer that could come as early as
Hussain al-Abdulla, executive board member of Qatar Holding,
the investment arm of the country's sovereign wealth fund, said
in May that Qatar Petroleum planned to offer shares in four of
its units in coming years.
A multi-billion dollar IPO of Doha Global Investment Co, a
new $12 billion investment firm backed by assets from Qatar's
sovereign wealth fund, appears to have been shelved because of
technical challenges and, perhaps, Qatar's change of government
in June. So there is speculation that to develop the stock
market, the new government may proceed with the Qatar Petroleum
IPOs, which might prove simpler and more straightforward.
Trading volumes in the Gulf were mostly modest on Sunday as
Saudi Arabia, by far the region's biggest market, was closed for
a two-day National Day holiday.
In Dubai, the index gained 0.6 percent to 2,681
points, a near four-week high, as buyers returned after a dip
early in the day. The market faces major technical resistance on
its August peak of 2,762 points.
Mashreq Bank surged its daily limit of 15 percent
to a near four-month high, extending its gain since the bank
said it would increase its foreign ownership limit to 20
percent. It jumped 15 percent on Thursday; trading remains very
Union Properties, a popular target for retail
investors, climbed 12 percent.
Egypt's bourse rose to a fresh five-week high as local
investors bargain-hunted, and as Thursday's 0.5 percentage point
cut in official interest rates helped sentiment.
Shares in Arabia Cotton Ginning jumped 9.9 percent
to 5.22 Egyptian pounds, their highest since November 2010,
after the firm said it was looking to add real estate as a
business line and was waiting for approvals to sell some of the
land it owns. It faces strong chart resistance around 6.0
pounds, which has capped it since late 2008.
"Locals have been active in the last period and are the
driving force," said Amr Reda, assistant vice-president at
Pharos Securities Brokerage in Cairo.
"On the political front, everyone is waiting for the
constitution to be drafted. The security situation is better
than before and there is a strong belief that the army is
dealing with insurgency."
Last week, security forces stormed a town near Cairo
dominated by supporters of ousted Islamist President Mohamed
Mursi, exchanging fire with militants. Many Egyptian investors
view such violence as positive overall, since it suggests
authorities are taking a strong line against militancy.
As expected, the central bank cut its overnight interest
rate by 50 basis points on Thursday; although the move may not
prompt any immediate rise in corporate investment, it added to a
feeling that economic conditions might gradually be normalising.
Foreign investors mostly still appear to be staying out of
the stock market, however, suggesting its rally could fade
quickly as the main index nears technical barriers.
The index rose 1.0 percent on Sunday to 5,587
points, its highest level since Aug. 14. It faces major
technical resistance at 5,682 points, the August peak hit in the
wake of Mursi's ouster.
* The index rose 0.6 percent to 2,681 points.
* The index slipped 0.1 percent to 3,809 points.
* The index rose 1.0 percent to 5,587 points.
* The index dropped 0.9 percent to 9,786 points.
* The index slipped 0.03 percent to 7,846 points.
* The index fell 0.3 percent to 6,581 points.
* The index dropped 0.3 percent to 1,195 points.