March 7, 2011 / 2:14 PM / 9 years ago

MIDEAST STOCKS-Saudi banks in late surge; most mkts resume slide

* Saudi banks up on mortgage law speculation

* State funds remain buyers of Saudi stocks - traders

* Dubai, Kuwait, Oman down as regional worries weigh

By Matt Smith

DUBAI, March 7 (Reuters) - Saudi banks made a late surge on Monday to help the kingdom’s benchmark .TASI rally for a third day, but most Middle East markets fell, resuming declines as regional political worries weighed.

The banking index .TBFSI ended 5.5 percent higher, having been down 1.7 percent intraday. Riyad Bank (1010.SE) and Banque Saudi Fransi (1050.SE) gained about 10 percent each.

“This has to be speculation the mortgage law will come in very soon,” says a Riyadh fund manager who asked not to be identified.

A mortgage law, in planning for almost a decade, will come in soon, the Chairman of Saudi Arabia’s Shoura Council said in an online report on late Sunday. [ID:nLDE726024]

Saudi Arabia’s index climbed 3.3 percent to trim its 2011 losses to 10.1 percent, with state-linked funds likely to remain buyers. These funds had targeted petrochemicals stocks in previous sessions.

Saudi Basic Industries Corp (2010.SE) (SABIC) rose 2.7 percent and has made double digit gains since Thursday’s six-month low, while other petrochemicals’ shares are also up.

“The tendency is to compare to oil prices to petrochemicals producers’ shares and their performance has diverged,” said Walid Shihabi, Shuaa Securities chief.

“There’s a strong case for this to narrow. Petrochemicals are on track to have a strong quarter in terms of profitability, but people with a longer-term perspective will be worried about the impact of higher prices on demand.”

Oil prices hit a 30-month high on Tuesday. [O/R]

Qatar rose 2.6 percent, its largest gain in three months, on the first day’s trade following a long weekend.

“Institutions are leaders in terms of liquidity - local funds have been buying and this should continue for the next few days, but foreigners are cautious and unlikely to take as big positions as they did before the crisis,” said Hani Girgis, assistant chief dealer at Dlala brokerage.

Qatar stocks, along with those in other Gulf Arab markets, have tumbled amid Middle East unrest that has toppled veteran rulers in Egypt and Tunisia and sparked deadly protests in Bahrain and Oman. Those in turn raised fears Saudi Arabia, the world’s top oil exporter, could become engulfed in sectarian strife. [MEAST-POL-RTRS-LEN]

“I think it’s a little premature to say everything will be okay - the political situation in Saudi Arabia is definitely something I would continue to worry about,” said a Kuwait-based trader who asked not to be identified.

Dubai’s index fell 1 percent to near Thursday’s six-year low, while Kuwait, Abu Dhabi and Oman also all slid.

“Some (UAE) names will not rebound much from this fall,” said Robert McKinnon, ASAS Capital chief investment officer.

“There aren’t a whole lot of quality names to buy in the UAE. I still don’t like real estate other than Emaar.”

Dubai’s benchmark, heavily skewed towards property-related stocks, is down 78 percent from a 2008 peak, while Dubai house prices have fallen about 60 percent over a similar period and are forecast to make further double digit declines. [AE-REA-POL]

Aramex fell 3.6 percent and Emaar Properties (EMAR.DU) slid 1.2 percent.

“Fundamentals don’t matter at the moment,” said McKinnon. “Everything has sold off to ridiculous levels. Some stocks deserve it, some don’t. So we are focused on buying the ones we are most confident don’t deserve (this) punishment and accept we may have another 10 to 15 percent draw down.”


* The index .TASI climbed 3.3 percent to 5,951 points.


* The index .QSI rose 2.6 percent to 7,682 points.


* The measure .DFMGI fell 1 percent to 1,375 points.


* The benchmark .ADI dropped 0.4 percent to 2,549 points.


* The index .MSI fell 1.8 percent to 6,288 points.


* The benchmark .KWSE dropped 0.9 percent to 6,135 points


* The measure .BAX edged up 0.1 percent to 1,397 points. (Editing by Firouz Sedarat)

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