DUBAI, April 24 (Reuters) - Saudi stocks paused in early trade on Tuesday after hitting a more than two-year high on the previous day as key blue-chip stocks were seen as expensive. Other Gulf markets moved in narrow ranges as investors digested first-quarter earnings.
The Saudi index was almost flat at 8,321 points, hovering near levels last seen in August 2015. The index has gained 15 percent this year because of inflows of foreign funds and strong corporate earnings.
The main blue chips such as banks and Saudi Basic Industries (SABIC) were flat early on Tuesday.
“In terms of broad valuation metrics at a 16 times price to earnings multiple, it is definitely not cheap, given earnings growth is not yet visible,” Vrajesh Bhandari, portfolio manager at Al Mal Capital in Dubai, said of Saudi Arabia.
“For instance, SABIC at 19 times is a good 15 percent more expensive than its historical average ratios. In fact, I feel most large caps are either full or have built a 5-10 percent froth over their fair market value.”
Dallah Healthcare dropped 2.5 percent after its first-quarter net profit fell 32 percent. The company said it was hit by higher start-up expenses from a new hospital project, the imposition of value-added tax, and provisions for credit losses as it adopted International Financial Reporting Standards.
Arabian Cement tumbled 7.6 percent to 30.45 riyals, its lowest since August 2011, in heavy trade after reporting a surprise first-quarter net loss of 6.1 million riyals ($1.6 million); three analysts surveyed by Reuters had on average forecast a profit of 69 million riyals.
Dubai stocks were flat, supported by Emaar Properties, which was up 1.1 percent as bargain-hunting emerged in the stock after recent selling. Emaar is still down 14 percent so far this year. DAMAC Properties was down 2.2 percent, extending sharp losses suffered a day earlier after it lowered its annual dividend. The dividend cut was not a shock for institutional investors who track the company’s cash flow, but retail investors were caught by surprise, analysts said.
Qatar’s index was fractionally lower after a spate of strong earnings helped recent gains. The index is up 7 percent so far this year.
Kuwaiti education company HumanSoft dropped 3.8 percent after a shareholder meeting declined to approve a board proposal to distribute a stock dividend of 70 shares for every 100 shares, though it did approve a motion to raise the annual cash dividend to 175 fils per share from an originally proposed 160 fils. (Reporting by Saeed Azhar; Editing by Andrew Torchia)