Dubai heavyweight Emaar Properties fell on Wednesday after reporting a drop in quarterly profit on rising costs, but the overall market recovered from an early slide, suggesting investors' underlying optimism had not changed. Property developer Emaar reported a worse-than-expected net profit of 556 million dirhams ($151.4 million) in the quarter ended March 31, compared to 606 million dirhams in the same period a year ago.
A Reuters poll of six analysts had predicted an average profit of 600 million dirhams. Emaar shares slipped 1.3 percent in response, but they remain up 48 percent since the end of last year. The profit drop was largely due to higher sales costs, the company said, and revenue rose 16 percent.
So investors decided the profit drop made no difference to the bullish outlook for the property sector. Emaar's chairman said on Wednesday that he expected his company's real estate business to increase drastically. Dubai's index shrugged off early losses to end 0.1 percent higher, though gains were smaller than in recent sessions.
"As the UAE bellwether, a great deal was expected from Emaar numbers. Whilst solid, there was no upside surprise and some profit-taking has been evident today," said Julian Bruce, EFG-Hermes' director of institutional equity sales. "This prompted caution from recent buyers in the broader market, and it was good to see the index taking a bit of a breather after recent exuberance."
Other Gulf markets were mixed on Wednesday. Egypt's market and Bahrain's bourse were closed, as was much of Asia and Europe, for a Labour Day bank holiday. Kuwait's measure jumped 1.8 percent to 7,563 points, rising for the ninth straight session. Some said the rise above 7,500 points was technically bullish. "Over the medium and short terms, the index is moving in an uptrend. A break above this level (7,500) would indicate a continuation of the uptrend," said a note from NBK Capital.
"The next target is 7,600. We view any pullback to the support levels as a buying opportunity. The medium term target is 8,400." Kuwait Projects Co (Kipco) rose 1.2 percent after it said it was on track for double-digit revenue growth this year, although quarterly profit was flat.
Several blue-chip stocks fell in Saudi Arabia after oil dropped below $101 a barrel on Wednesday, extending its biggest monthly drop in 11 months, as fresh concerns over economic growth in China weakened the demand outlook. Saudi Basic Industries (SABIC) slipped 0.6 percent, weighing on the general index, which ended 0.1 percent lower at 7,175 points. Loss-making telecommunications operator Zain Saudi fell 4.0 percent, adding to losses from the previous session, after it said it had extended the maturity on $3 billion of loans for up to five weeks.
It was the latest in a series of extensions since 2011, and investors had been hoping the company would finally be able to put together a new long-term financing package, reducing uncertainty. Qatar Navigation climbed 4.2 percent after posting positive first-quarter results and announcing board agreement for a share buy-back programme.