DUBAI: Most Gulf markets closed lower Sunday after the United States put off further monetary easing, while Egypt’s bourse rallied on talks of a possible stake purchase in France’s Societe Generale’s unit.
Saudi Arabia’s bourse, the largest Gulf market, finished lower for a second session since Wednesday’s 16-week high. The index lost 0.6 percent with large-cap stocks weighing.
Bellwether Saudi Basic Industries Corp dropped 1.4 percent, Al Rajhi Bank dipped 0.7 percent and Samba Financial Group fell 1.5 percent.
U.S. Federal Reserve Chairman Ben Bernanke kept the door open for further monetary easing, which spurred gains in global markets, but analysts were predicting some declines in Gulf bourses if policy action was not announced.
“The Saudi index has gone above 7,000 [a key psychological level] but it was mainly driven by speculative stocks and bluechips underperformed significantly. This is a bad sign,” said Farouk Miah, acting head of research at NCB Capital.
“You can’t have a rally based just on speculative stocks. This is partially because of lack of news,” he said.
In the next few weeks, large-caps could see increased interest as investors position for third-quarter earnings, he added.
The insurance sector index gained 0.8 percent, accounting for the heaviest turnover. Retail investors target these small-caps when global markets are volatile.
In Qatar, regional and foreign institutional investors sold large-caps and the measure lost 0.3 percent.
The market is also poised for a technical correction.
It rallied to a 15-week high last week and analysts expect it to drop to 8,360 before it can continue higher.
Heavyweight Industries Qatar shed 0.7 percent, Qatar Electricity and Water eased 0.2 percent and Qatar National Bank declined 0.4 percent.
“The market is trading in volumes below its 30-day average – non-Qatari institutions remain net sellers on the market,” said Ahmed Shehada, head of trading at Qatar National Bank Financial Services.
“They are waiting to see the liquidity move to infrastructure developments,” he added.
Last month, a $124 million contract to build Qatar’s first rail system was awarded to Australian construction giant Leighton Holdings.
Doha’s market is the second-worst performing Gulf market after Oman this year, with year-to-date losses at 3.7 percent. But some analysts and investors argue selling earlier this year was unjustified and that Qatari firms benefit from clarity on government policy and economic growth.
In Egypt, the benchmark index climbed 1.7 percent, boosted by news that Qatar National Bank is in talks to buy a controlling stake in the Egyptian unit of France’s Societe Generale, traders said.
The Paris-based bank, which owns 77.17 percent of Egypt’s National Societe Generale Bank, said the talks were preliminary, but the news led the market to its highest level since March 7, with banking stocks performing especially well.
NSGB surged 10 percent, the highest increase allowed under stock market rules. Commercial International Bank, Egypt’s biggest listed privately owned bank by assets, rises 5.4 percent.
Elsewhere, UAE bourses slipped as investors booked profits in property and related stocks and await new catalysts.
Dubai’s index slipped 0.1 percent, trimming year-to-date gains to 14.2 percent and Abu Dhabi’s benchmark slipped 0.2 percent.
“Some overbought names are pulling back slightly and until Q3 earnings, there isn’t any regional catalyst,” said Amer Khan, fund manager at Shuaa Asset Management. “Our markets will look to direction from global markets, which are being driven by policy action.”
Bellwether Emaar Properties shed 0.9 percent, engineering firm Drake and Scull fell 1.3 percent and contractor Arabtec slipped 0.4 percent
In Kuwait, investors opened fresh positions at the beginning of the month, lifting the measure by 0.6 percent to its highest close since June 21.
Investors are buying battered stocks after the market slumped to an eight-year low on Aug. 12, but small-cap stocks are driving the rebound.
“Our market continues to lack foreign institutional investors with long-term views,” said Fouad Darwish, head of brokerage at Global Investment House. “I don’t think this is sustainable unless bigger stocks are a part of this. Profit-taking will happen and will have more of an impact.”
The long-standing political crisis in the OPEC member state, a hamper to economic development, affected second-quarter earnings of banks and hit investor sentiment in recent months.
Thousands of Kuwaitis took part in a rally last week to protest any changes to the electoral law which they said could harm the prospects of opposition lawmakers in upcoming elections.