MIDEAST STOCKS-MSCI shares pose main drag on Gulf as global markets skid – Reuters

* MSCI emerging market shares weigh on Dubai, Qatar, Egypt

* Saudi slips but ends week with modest gain

* Saudi trading volumes shrinks by half

* Trump visit not expected to move market

* Saudi Q1 aggregate income up but many valuations stretched

By Celine Aswad

DUBAI, May 18 Stock markets in the Middle East
most exposed to foreign fund flows followed global shares lower
on Thursday, while the Saudi Arabian index, dominated by local
investors, outperformed the region for the day and the week.

Dubai’s index lost 0.5 percent as most shares that
are constituents of the MSCI emerging market index dropped. DXB
Entertainments slumped 4.3 percent and Emaar
Properties fell 0.8 percent.

Members of the MSCI emerging market index were also weak in
Abu Dhabi, with First Abu Dhabi Bank losing 0.4 percent
and telecommunications operator Etisalat down 0.3
percent. The index closed 0.3 percent lower.

In Qatar, nine of the 11 MSCI emerging market index shares
were down, with Commercial Bank declining 1.0 percent.

Egypt’s index dropped 0.9 percent in thin trade as
Talaat Mostafa Group – which is currently part of the
MSCI emerging market index but will be removed on June 1 – lost
2.8 percent. The largest Egyptian stock in the index, Commercial
International Bank, fell 0.9 percent.

Saudi Arabia’s index, lost 0.1 percent with trading
volume shrinking by a little over a half from the previous
session. Forty shares rose, 106 declined. However, the index
outperformed Gulf peers for the week with a 0.8 percent gain.

Of the 20 most valuable companies, eight declined and the
same number rose. Saudi Arabian Mining (Ma’aden)
closed 0.5 percent higher.

U.S. President Donald Trump is due to visit Saudi Arabia in
coming days and some investors hope deals could be signed
between Saudi and American companies in the mining, energy, auto
and defence sectors. Most announcements from the meeting,
though, are expected to be about previously revealed deals or
memorandums of understanding rather than concrete new projects.

Combined net profits of listed Saudi Arabian companies grew
37 percent from a year earlier in the first quarter, but that
was almost entirely due to petrochemical firms, which benefited
from higher oil and product prices.

The market’s valuation has risen to 14.6 times forward
earnings from 11.3 times in the first quarter of 2016.

“The valuation expansion outpaced earnings growth,” said
Mohammad El Hajj, macro strategy analyst at EFG Hermes.”

“The market is now trading at a premium to most other
regional markets and we believe petrochemicals are now fully
valued. The banking sector offers some value, as it is trading
slightly below fair value.”

The total net profit of Qatari companies was flat in the
first quarter compared to a year ago but valuations have
expanded, making the fundamental picture for that market less

In Dubai, aggregate net income fell by almost one tenth but
valuations remain relatively cheap.

“UAE markets are fundamentally stronger than others but the
recent very low volumes are keeping funds away – there is simply
no appetite for massive allocations,” said a Dubai-based trader.



* The index fell 0.1 percent to 6,938 points.


* The index declined 0.5 percent to 3,378 points.


* The index fell 0.3 percent to 4,581 points.


* The index lost 0.4 percent to 10,103 points.


* The index declined 0.9 percent to 12,952 points.


* The index edged down 0.1 percent to 6,726 points.


* The index fell 0.1 percent to 1,309 points.


* The index lost 0.2 percent to 5,415 points.

(Editing by Andrew Torchia/Mark Heinrich)

MIDEAST STOCKS-MSCI shares pose main drag on Gulf as global markets skid – Reuters}

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