Egypt's benchmark tumbled on Wednesday in the first day's trading since the fall of former president Hosni Mubarak, but Gulf Arab markets were steady in light trade. Egypt's index plunged 8.9 percent, taking its 2011 losses to 28 percent. Trading had been suspended since January 27. Of 30 stocks on Cairo's top index, 23 fell by more than 9 percent.
"Once Egypt's market stabilises, foreign flows will come back strongly into regional markets, especially Oman, Qatar and Saudi Arabia because they offer the best valuations," said a Riyadh-based trader who asked not to be identified. Saudi Arabia's index rose 0.3 percent to a four-week high as investors looked to the country's upbeat economy, with extra state spending announced last week well received by investors. The measure is down 3.9 percent this year. "We've made a V-shaped recovery from the market meltdown, but people have yet to price in increased petrochemicals prices," said the Riyadh-based trader, says the trader.
Banks and petrochemicals are the two main sectors on Saudi's bourse, with the latter's prices closely tied to oil. Dubai hit a month-high, but is in the red for 2011. "It's very positive for UAE markets that they haven't reacted to Egypt," said Mohammed Yasin, CAPM Investment chief investment officer.
State-owned conglomerate Dubai World signed a final agreement with its 80 creditors on Wednesday to restructure debt worth $24.9 billion. Dubai's index was among the hardest hit as unrest in North Africa sparked protests in Arab neighbours Oman and Bahrain. Ports operator DP World fell 0.3 percent after hitting a five-week intraday high. The company reported a 35 percent rise in 2010 profit to $450 million. Kuwait's index slipped 0.6 percent to be within 160 points of March 7's six-year low.
"Kuwait will remain volatile - fundamentals are not there," said Badr al Ghanim, Global Investment House vice-president of asset management. "If you look at valuations, the market doesn't look very attractive." Zain, which climbed 1.5 percent, is the only one of Kuwait's 20 largest stocks to rise. "We don't expect many surprises for Q1 earnings," said Al Ghanim. "Banks haven't done anything exceptional this year - lending growth wasn't there. We don't expect a drop in profits, but we also don't expect growth."
Qatar's benchmark fell for third day as volumes hit a four-month low, with shares in bellwether Industries Qatar suspended for a board meeting. Foreign funds have returned to Qatar, having previously left amid regional unrest, but are now shorter-term investors, said Hani Girgis, assistant chief dealer at Dlala brokerage.