Most bourses in the Gulf declined on Sunday as many retail investors withdrew from the markets with the beginning of Ramazan and trading volumes plunged. Dubai was the biggest loser, sliding 2.4 percent as daily trading volume shrank 59 percent.
"The market is very slow, with very low trading volumes, which is expected" during Ramadan, said Ali Adou, portfolio manager at The National Investor in Abu Dhabi.
Shares in builder Arabtec, which again topped daily turnover, dropped 6.5 percent, extending their loss this month to 57 percent.
Investors are concerned about Arabtec's ability to carry out its ambitious expansion plans following a sudden management change, as well as the fate of former chief executive Hasan Ismaik's 28.85 percent stake in the company. Major shareholder Aabar has not clarified its intentions towards the company.
Earlier this year Arabtec more than tripled in value, partly because it was one of 19 stocks from the United Arab Emirates and Qatar that index compiler MSCI added to its emerging market benchmark at the end of May.
The second-biggest loser among those stocks is Dubai Financial Market (DFM), the emirate's bourse operator. DFM jumped 78 percent between the end of last year and its June 1 peak, but has dropped 32 percent this month.
The bourse's trading commission fees quadrupled in the first quarter thanks to surging turnover ahead of the MSCI upgrade, and its net income jumped eightfold.
However, analysts expect growth to moderate later in the year and consider the stock overbought. Six analysts surveyed by Reuters have a median target price of 2.43 dirhams for the stock, which dropped 5.6 percent to 2.89 dirhams on Sunday; four of them consider it a "sell" or an "underweight".
Abu Dhabi's bourse declined 0.4 percent on Sunday. Shares in investment firm Waha Capital went up as much as 1.0 percent after the company said it was part of a consortium that took over Dubai's National Petroleum Services, but then fell to close down 2.0 percent.
Qatar's main index slid 1.2 percent, taking its loss this month to 15 percent.
"I think in Qatar the market is on a downward trend more or less for the same reasons (as in the UAE) - profit-taking plus short-term invsetors getting out of the market," said Shakeel Sarwar, head of asset management at Securities & Investment Co in Bahrain.
Allegations of corruption in Qatar's winning bid to host the 2022 soccer World Cup - which organisers strongly deny - have also hurt investor sentiment, he noted. "Foreign investors have been net sellers for the last few weeks."
FIFA's investigator is due to report on the results of his probe into the matter in late July. Losing the tournament hosting rights would be a blow to Qatar's reputation, although its booming economy would hardly suffer if World Cup-related projects were cancelled. Many fund managers think Qatar remains likely to retain the rights.
In Egypt, shares in investment bank EFG Hermes hit a three-year intra-day high of 15.60 pounds after its financial adviser valued the firm at 22.93 pounds. But the stock then slipped and closed at 15.36 pounds, down 0.5 percent, while the Cairo index fell 0.3 percent.
EFG Hermes had initiated an independent evaluation in response to an offer from Beltone Financial Holding and billionaire Naguib Sawiris to buy a 20 percent stake in the firm at 16.00 pounds. After trading closed, Beltone and Sawiris said they would not change their offer.
Kuwait's general index was almost flat while trading volume dropped 42 percent, as the market largely ignored Thursday's by-election to replace five parliament members who had quit over a row about questioning the prime minister.
"The elections just passed by and were just a matter of going through the motions. They were a peripheral event," said Nasser al-Nufaisy, director at the Jamman Centre for Economic Studies.
"In the past, there was competition and blocs. Then a boycott happened so enthusiasm waned," he added, referring to a decision by most opposition groups to boycott elections.
Kuwait's index, down 7.5 percent this year, is the worst performer in the Gulf. Analysts say, however, the decline is partly explained by investors shifting funds out of small- and medium-cap stocks into blue chips. The large-cap benchmark rose 0.6 percent on Sunday, extending its gains this year to 7.7 percent.
Comments
Comments are closed.