Kuwait's benchmark fell to a seven-year low on Monday as bank stocks slumped, with traders pessimistic on the local economy amid political turmoil in the world's sixth-largest oil exporter. National Bank of Kuwait dropped 1.8 percent and Islamic lender Kuwait Finance House slid 1.1 percent. The benchmark fell 0.6 percent to its lowest close since August 2004. It is down 3 percent since Kuwait's emir dissolved parliament on December 6 following sustained protests against the prime minister.
"It looks like all investors were selling today - there are still political issues in Kuwait and the government doesn't seem to be doing anything about helping the economy, so investors are cautious," said a Kuwait trader who asked not to be identified. He forecast the index would extend declines from Monday's close of 5,694 points, with its next support at 5,380. "I am not optimistic - there are no stocks good enough to buy, because even if you think their fair value is higher than today's price, you know they have further to fall," he added.
Saudi Arabia's index eased from Sunday's five-month high as investors paused ahead of corporate earnings, with firms due to report within 15 working days of the start of 2012.
"For blue chip banks, I expect a modest increase in profit compared to the third quarter, while I doubt petrochemicals will see any increase from the record results of Q3 because of the decline in commodity prices," said Hesham Tuffaha, Bakheet Investment Group's head of asset management.
Other factors were also at play, he said. "If oil holds above $100, I think the market will see a gradual increase, but if we have more tensions with Iran, it will have a major effect on the Gulf as a whole," Tuffaha added. Iran's Supreme Leader Ayatollah Ali Khamenei on Monday said it would not bow to the pressure of sanctions imposed to get the Islamic Republic to change its nuclear course. Brent crude futures slipped on Monday, reversing earlier gains to trade below $113 a barrel.
Egypt's benchmark index rose 0.6 percent in its first session after the Coptic Orthodox Christmas holiday. "There is no volume, nor appetite among investors," said Tarek Abaza of Naeem Brokerage. "Local institutions are inactive and Arabs are non-existent." Commercial International Bank and Orascom Construction (OCI) rose 4.7 and 2.6 percent respectively, while property developer Talaat Mostafa Group lost 3.1 percent.
"A lot of investors are selling but there are no buyers. If transactions are completed we might see the market losing," Abaza said. National Bank of Abu Dhabi (NBAD) fell 3.7 percent and telecoms operator Etisalat dropped 1.3 percent as Abu Dhabi's index made its largest decline in two weeks.
Dubai was near-flat, but remains within 20 points of recording a new seven-year low. "We just don't see any appetite from investors - they have liquidity and are looking for investments, but not in equities," said a Dubai-based trader who spoke on condition of anonymity. "UAE stocks are in a tough spot - spending is coming back from the government and consumers, but that is not being reflected in the markets."
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