* Largest one-day drop in four months
* Index breaks major technical support
* Petchems push Saudi Arabia to 59-month high
* Dubai's Union Properties soars 11 pct
* Oman posts eighth straight gain
By Nadia Saleem
DUBAI, Aug 18 Egypt's bourse suffered its
largest one-day drop in four months on Sunday after hundreds of
people were killed in a crackdown by the army-backed government
on supporters of the Muslim Brotherhood.
Cairo's main index tumbled 3.9 percent to 5,335
points. It had dropped 1.7 percent on Wednesday, when security
forces started taking action to disperse protesters, and was
shut on Thursday because of the violence.
The market traded for three hours on Sunday instead of the
usual four, to give time for people to return home before a
"Civil war is knocking on the door and lots of lives have
been shed and I don't think it will stop here," Ali Adou, fund
manager at Abu Dhabi investment firm The National Investor, said
of Egypt's political situation.
"It will be a while before people will think of investing in
the current environment."
The index fell on Sunday below major technical support
around 5,450 points, where it peaked in May and July. The next,
minor chart support is at 5,275 points, the late July low.
In addition to the bloodshed, the government has threatened
to ban the Brotherhood, which could end remaining hopes for
inclusive parliamentary elections and a return to civilian rule
in coming months.
The closure of some major foreign-owned industrial
facilities in the past few days, as well as the fresh blow to
the tourist industry, suggest that even if billions of dollars
in aid from Egypt's Gulf allies can keep it financially afloat
in coming months, the economy could deteriorate further. The
resulting unemployment could worsen social
The stock market is still up 19 percent from its June low,
thanks to hopes that the ouster of President Mohamed Mursi would
produce a more effective government. That leaves plenty of room
for investors to sell further in order to lock in profits.
Some foreign investors and economists, such as VTB Capital's
Middle Eastern chief economist Raza Agha, are discussing the
possibility of Egypt following the example of Algeria, where a
military crackdown on Islamists in the 1990s led to a protracted
"With the army and Al Azhar University's social standing
likely damaged given developments since Mursi's ouster, and
Egypt's Arab and Western bilateral partners having failed, it is
not clear if anyone can play a mediation role," he wrote late
Elsewhere, Saudi Arabia's benchmark climbed 0.3
percent to hit a new 59-month closing high of 8,157 points,
boosted by petrochemical shares. The market is up 20 percent
year-to-date; the petrochemical sector index rose 1.1
percent on Sunday.
The rally is partly driven by the market's break this month
above 8,000 points, an important level psychologically.
"Investors are adding more risk and the break above the
8,000 level has kept the positive momentum," said John
Sfakianakis, chief investment strategist at Saudi investment
"The short-term outlook is for another leg up as additional
liquidity is coming onto the market in selective
names, including some banks and petrochemicals."
Some analysts, however, note the banking and petrochemical
sectors posted only single-digit growth in second-quarter
earnings, and argue this may not be enough to extend the bull
"We have started to see the market relatively overvalued,"
said Hesham Tuffaha, a Riyadh-based fund manager.
"There are many sectors that are being driven by strong
growth but the largest sectors, banks and petrochemicals, have
not posted double-digit growth, which is the only thing that can
justify the sharp rally in the index."
The market may therefore come under pressure from
profit-taking in the near term, he adds.
In the United Arab Emirates, Dubai's measure
slipped 0.2 percent, trimming 2013 gains to 61.9 percent.
Small-cap real estate stocks surged, however, after lagging
earlier this year. Union Properties jumped 10.8
percent to a three-month high; it is up 16.5 percent
year-to-date. Volume in the stock was a massive 423 million
shares, its highest in more than two years.
Deyaar Properties rallied 5.8 percent.
"Broad concerns in the real estate sector are dissipating
and the discount to market was too much - it was only a matter
of time that people looked at it," Amer Khan, director at Shuaa
Asset Management in Dubai, said of Union Properties. "The
discount is big enough to run the stock up for a while."
Elsewhere, shares in Oman's Al Hassan Engineering
jumped 5.5 percent after its part-owned Abu Dhabi subsidiary won
a 69.5 million dirham ($18.9 million) sub-contract for
construction work. The firm said in a statement that the work
would be completed in August 2014, though the project was still
pending final approval by the ultimate client.
Muscat's benchmark climbed 0.2 percent to 6,847
points, marking its eighth straight gain and highest closing
level since February 2011. It faces very strong technical
resistance at 7,044 points, which capped the market in April
2010 and January 2011.
* The index dropped 3.9 percent to 5,335 points.
* The index gained 0.2 percent to 9,910 points.
* The index slipped 0.2 percent to 2,627 points.
* The index climbed 0.3 percent to 8,157 points.
* The index retreated 0.2 percent to 3,874 points.
* The index advanced 0.5 percent to 8,135 points.
* The index gained 0.2 percent to 6,847 points.
* The index ticked up 0.03 percent to 1,201 points.