Kuwait's Agility tumbled to a 15-week low on Sunday after US prosecutors filed a civil lawsuit against the logistics operator. Agility fell 4 percent to its lowest close since September 27, despite denying the US move amounted to a new suit. Agility said it was instead a "procedural amendment" to an earlier case.
On Friday, Reuters reported that US prosecutors had filed a civil suit against Agility, accusing it of defrauding the government over food product contracts to the US military in the Middle East worth $9.8 billion. This follows a criminal suit, first filed in November 2009.
The latter led Agility to be replaced as the main regional supplier to US forces and the firm was barred from bidding for any new US contracts while the court case was pending.
"Most investors are fed up with the lack of transparency from Agility," said Kareem Murad, an analyst at Shuaa Capital. "Putting aside the legal case, the US prime vendor contract accounted for 40 percent of Agility's revenues, with this contract also providing a 30 percent margin, but from January 1 this contract has gone to another company. "So Agility is facing a substantial drop in its operational income and its bottom line could turn negative this year."
Kuwait's index fell 0.1 percent to 6,966 points, declining for a second day since Wednesday's two-month peak, but Naser al-Nafisi, general manager for Al Joman Center for Economic Consultancy, said the market should remain steady, even if quarterly results fail to excite.
"Fourth-quarter earnings will be below the 2010 quarterly average because the stock market didn't put in a good performance in Q4," said Nafisi.
"But Q4 is over and I think most investors are looking to the future - capital expenditure from the government spending plan started last year and will increase in 2011, while oil is (near) $90, which will help support the government budget." In August, Kuwait's government said the country's banks could finance a 30 billion dinar ($104 billion) development plan.
Saudi Arabia's index fell 0.1 percent, easing from Saturday's eight-month peak, but this drop was seen as temporary.
"Saudi sentiment is pretty high - people are positioning themselves for good Q4 numbers from petrochemicals, so shares are holding firm despite oil dropping below $90," said a Riyadh-based trader at an international bank.
Index heavyweight Saudi Basic Industries Corp fell 0.7 percent. The petrochemicals index fell 0.4 percent, although it remains up 17 percent in 12 months. Qatar bluechips were mixed as the index ended flat, equalling Thursday's 27-month high. Shares have surged ahead of a massive infrastructure build-out leading up to the 2022 soccer World Cup. Industries Qatar fell 0.9 percent, but Commercial Bank of Qatar rose 1.3 percent.
"The momentum is there and the market will continue to rise, although gains will not be as large as before," said Robert Pramberger, acting head of asset management at Doha-based investment company The First Investor. "Investors are not in the market for Q4 results, but for the longer term."
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