Egypt's index gained 2.4 percent on Tuesday as foreign investors returned, betting the market could only gain following a disastrous 2011, while Qatar National Bank (QNB) weighed on Doha's index after its dividend disappointed. All but five stocks on Egypt's benchmark index gained on bargain-hunting for beaten-down blue chips after the market lost almost half of its value last year, with trading volume up 50 percent from a day earlier.
Heavyweight stocks most favoured by foreigners were among the key gainers, with National Societe Generale Bank up 4 percent and Orascom Construction rising 4.7 percent. "We've seen a clear bullish intention since the start of the year, with some growing interest from foreigners," said Omar Darwish of brokerage CIBC. He said foreign investors accounted for 38 percent of activity on Tuesday, compared to 15-20 percent on a normal day.
"There are still no guarantees that the market is going to fly back up," said Darwish. In Qatar, QNB fell 5.2 percent, its biggest drop since late 2009, after it proposed to pay a 40 percent cash dividend and issue bonus shares amounting to 10 percent of share capital.
"QNB's results tend to read across the market and so are dragging other bank stocks down today," said Shahid Hameed, Global Investment House head of asset management for the Gulf. "Retail investors have seen the proposed dividend and decided to sell."
Actually, when calculated on an adjusted dividend per share basis, the dividend is higher than that of last year, said Raj Madha, Rasmala MENA banking analyst. Doha's index fell 2.1 percent to a six-week low, its largest drop since August 7.
Saudi Arabia's Al-Rajhi Bank rose 2.4 percent to help the index end higher for a third session in four Rajhi's fourth-quarter profit is expected to increase 15 percent, according to a Reuters poll. "Saudi banks' credit growth has been very weak over the last 18 months, but has picked up in the past two quarters," Hameed said. "Bank stocks have underperformed the rest of the market, but valuations are good and they are well run with a conservative outlook and strong balance sheets."
In Dubai, Emaar Properties and builder Arabtec each climbed 1.2 percent as the index rose for a third session in four, but low liquidity offered little hope of a sustained rebound. Dubai bourse turnover last year was the lowest since at least 2004 and barely a tenth of the 2008 total, while the index is within 25 points of December's seven-year low.
"In the short term, (local) investors and Western institutions are happy to sit on the sidelines," said Julian Bruce, EFG Hermes' director of institutional equity sales. National Bank of Kuwait climbed 1.8 percent as the index eased away from Monday's seven-year low.