Egypt's stock market rose strongly on Tuesday but foreign funds were net sellers for a second time since the Egyptian pound was floated on November 3. Gulf markets diverged with Saudi petrochemical shares hit by weak oil prices. The Egyptian bluechip index added 1.8 percent to 13,015 points, a fresh all-time closing high, but trading volume fell slightly below its seven-day average.
Foreign investors, heavy buyers of Egyptian shares since the currency was floated, were net sellers by a small margin after also selling on Sunday this week. Mohamed El Nabarawy, head of asset management at Egypt's HC Securities & Investment, said foreign funds had been extremely underweight in Egypt for several years and were likely to remain interested in the market, so he did not expect their profit-taking to trigger a major pull-back by stocks.
On Tuesday some stocks favoured by local investors were the top gainers, with Arabian Cement jumping 9.9 percent to 7.75 Egyptian pounds. Beltone Financial placed a "buy" recommendation on the stock with a fair value of 12.60 pounds, citing higher cement prices and a healthy pricing environment as dynamics in the sector improved. Riyadh's index pulled back 1.0 percent to 7,008 points, nearing technical support on its mid-December low of 7,002 points.
A little over half of listed petrochemical producers declined after Brent oil futures retreated about 4 percent overnight. Advanced Petrochemical dropped 2.0 percent. Analysts at HSBC said in a note that most valuations of Gulf petrochemical shares under their coverage had caught up in recent weeks with improved fundamentals and higher oil prices, offering limited room for positive earnings surprises.
But Sahara Petrochemical rose 2.6 percent to 13.80 dirhams. Analysts at Riyad Capital raised their 12-month target price to 16.0 riyals from 15.0 riyals on expectations of an earnings revival in 2017, citing the company's strong association with top global producers such as Dow Chemicals and improved operating rates at its facilities. Retailer Jarir Marketing pulled back 1.5 percent after gaining 0.2 percent on the previous day, when it reported a 3.5 percent increase in fourth-quarter net profit and a 17.7 percent jump in revenue as sales of electronic goods rose.
Dubai's index edged up 0.1 percent after a weak start. Trading volume was strong with most activity focused on companies with share prices around 1.0 dirham - stocks often traded by short-term speculative investors. Builder Arabtec rose 1.5 percent but Union Properties, the most heavily traded share, lost 0.9 percent. The Abu Dhabi index also added 0.1 percent, finding some support from bluechip banks; Union National Bank and First Gulf Bank each rose 0.4 percent.
United Arab Bank jumped its 15 percent daily limit in very thin volume; some traders have been speculating there may be more consolidation in the finance industry following the merger of National Bank of Abu Dhabi (NBAD) and FGB, which is set to be completed in coming months.
Kuwait's index added 1.1 percent with Kuwait Finance House adding 1.8 percent in unusually heavy trade. A monthly Reuters poll published last month found 29 percent of regional fund managers expected to raise allocations to Kuwait and only 7 percent to reduce them - the most bullish balance for Kuwait since the Reuters poll was launched in September 2013. The managers cited attractive valuations.
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