Gulf stock markets stabilised on Thursday after steep falls earlier in the week, as steadier oil prices and overnight gains by US equities persuaded some bargain-hunters to return. Dubai rose 0.1 percent to trim its weekly losses to 3.1 percent, Qatar added 0.5 percent, and Saudi Arabia climbed 0.2 percent from Wednesday's three-week low despite another plunge by telecommunications firm Mobily.
Mobily fell the maximum daily 10 percent to 58.50 riyals, reaching a 27-month low. The company's shares have lost 27 percent in three days since it slashed its profits for 2013 and the first half of 2014 by a combined 1.43 billion riyals ($381.2 million), citing accounting errors, and also reported a 71 percent drop in third-quarter profit. Mobily's actions prompted the bourse regulator to launch a probe.
Before trading started, Abu Dhabi-listed Etisalat, which owns 27.5 percent of Mobily, said it was confident its affiliate would return to growth soon, but investors did not appear reassured. "We do believe there are major risks - at least over the short run," MubasherTrade wrote in a note. "Mobily's future dividends may be reduced, especially (as) the company has a large capital expenditure plan.
"The lack of clarity surrounding the incident - with the detailed financials not yet published - will likely deter potential investment from investors." Mobily's main rival Saudi Telecom Co rose 0.2 percent and other heavyweight stocks also rebounded, with Saudi Basic Industries Corp (SABIC) and Saudi British Bank (SABB) up 2.3 and 2.6 percent respectively.
"We were held hostage by volatility in commodity and global equity markets this week," said Marwan Shurrab, fund manager and head of trading at Vision Investments. "After US crude broke below $80, most retail investors felt fear of the unknown in terms of what will happen to oil prices and the impact on government spending plans, so wanted to reduce their market exposure." Oil was steady on Thursday, with Brent and US Light Crude trading within a 1.1 percent range as the selling pressure of recent days eased.
Banks helped steady Dubai's index, which is now up 31 percent in 2014. Emirates NBD rose 0.9 percent and Dubai Islamic Bank climbed 1.6 percent. "There was an inflow of money towards the end of the week as fundamental and institutional investors picked up stocks at levels that started to look attractive to them," said Shurrab. Banks' results were generally above analysts' forecasts, which should support long-term sentiment, said Sanyalaksna Manibhandu, manager of research at NBAD Securities.
"When people start to look forward to dividend payouts in the first few months of 2015, we will see the big banks in Dubai and Abu Dhabi lead the markets higher, but that won't be until late November or early December. "In the short term there will be volatility and weakness." Abu Dhabi's index fell 0.8 percent. Etisalat and First Gulf Bank were among the main drags, dropping 0.4 and 3.3 percent respectively.
Egypt's index declined for a second day since Tuesday's four-week high. It rose in early trade but then fell 0.8 percent to close at the day's low, trimming its 2014 gains to 39 percent as losers outnumbered gainers 24 to five. "Egypt is overdone - its fundamentals are much weaker than elsewhere in the region," added NBAD's Manibhandu.
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