Shares in Abu Dhabi made their biggest one-day gain in nine months on Monday, while most other Gulf stock indexes slipped as investors booked gains against a weak global backdrop. Abu Dhabi's main market index finished 1.3 percent higher, its largest daily rise since January 31. Banks helped lift the benchmark, which closed at a level last seen in July 2011.
National Bank of Abu Dhabi (NBD) rose 3.4 percent to 9.81 dirhams, extending this year's gains to 23.2 percent. Abu Dhabi Commercial Bank climbed 1.5 percent, while First Gulf Bank (FGB) ended flat, having gained 37.4 percent so far in 2012. Banks have in the last couple of weeks posted strong growth in quarterly earnings, with NBAD and FGB beating analysts' estimates for the three months to September 30.
Traders said there did not appear to be any fresh news event behind Monday's rally, but that retail investors poured money into banks to try to ride the momentum. "If you look at UAE banks in general, what people are looking for is credit quality and asset expansion - NBAD has the lowest non-performing loan ratio and FGB is in the top of its class in asset expansion," said an Abu Dhabi-based trader who asked not to be identified.
But Nabil Al Rantisi, managing director at Menacorp in Abu Dhabi, said NBAD and FGB had already priced in the bullishness of investors. "NBAD is at a critical area, and cooling down a bit is the most likely scenario for now - a retracement back to the 9 (dirham) level is something that will happen in the short term.
"A retracement before continuing upwards is the most likely scenario, as the general outlook on the UAE equity markets remains bullish," Al Rantisi added. Index heavyweight Etisalat rose 2.3 percent while some small-caps gained in heavy trade, boosted by speculative buying by retail investors. Eshraq Properties and Green Crescent Insurance Co jumped 9.7 and 9.1 percent respectively.
Dubai's Gulf General Investment Co soared 8.4 percent helping the Dubai index climb 0.8 percent to finish at its highest close since October 24. In Saudi Arabia, however, the bourse slipped for a third straight session from Wednesday's six-week high, closing 0.8 percent lower. Most sectors in the kingdom fell with turnover the highest in insurance stocks. The sector's index dropped 0.9 percent.
"This is mostly investors adjusting positions and some booking profits," said Faisal Al-Othman, portfolio manager at Riyadh-based Arab National Bank, suggesting the market would stay broadly flat through the end of this year. Elsewhere in the Gulf, Qatar's benchmark dropped 0.4 percent to its lowest finish since October 14. A lack of catalysts as well as the global environment spurred investors to cut positions.
In Kuwait, the index ticked up 0.03 percent to a near three-week high, holding on to gains that began after comments by the Emir last week. He said he would "deal with all problems" related to economic development and political stability, though he did not give details of his plans.
Analysts said activity by state-linked funds was helping to lift the market. In Oman, Renaissance Services tumbled 9.3 percent, the main drag on the market. Investors were disappointed with the engineering and marine firm's third-quarter earnings. It posted a 37 percent fall in third-quarter net profit before minorities.
The company also said its engineering group recorded an operating loss of 6.6 million rials for the first nine months of the year, against a 5.1 million rial loss in the corresponding period of 2011. It cited unprofitable contracts. "With the turnaround in business delivery we are confident the negative impact of engineering shall not reccur in 2013," it said in a statement. Muscat's index fell 0.9 percent to its lowest close since October 24.