DUBAI: Regional shares were mixed Sunday with some margin calls weighing on Dubai’s bourse and investors shifting funds from banks to petrochemical stocks helping Saudi Arabia’s measure snap a three-session losing streak.
Dubai’s measure retreated 0.6 percent, slipping off Thursday’s five-year high and trimming December’s gains to 11.4 percent.
Traders expect the trend to be weak until the new year, with little news flow to trigger fresh buying.
“Most brokerage firms are asking clients for margin calls toward the year-end to close their books,” said Hisham Khairy, head of trading for the institutional desk at brokerage firm MENA Corp. “There will probably be selling to equalize positions because most of the trading recently was on margin.”
Investors trade on margin, or leverage to increase profit margin and have to close their positions, or sell, to reduce their leverage back to zero.
Shares in small-caps drove a rally in December, the typical target for short-term bets.
Gulf Navigation fell 3.6 percent as investors booked recent gains. Union Properties shed 1.7 percent.
Abu Dhabi’s benchmark climbed 0.6 percent, a new five-year high, and extending 2013 gains to 60 percent.
Lagging banks helped boost the bourse; National Bank of Abu Dhabi climbed 2.7 percent to take the year’s gains to 40 percent. Dana Gas rose 2.3 percent to its highest since January 2010. The stock extends gains since saying it received a $53 million payment out of the total of $330 million owed to it by Egypt.
In Saudi Arabia, petrochemical shares helped lift the market. The sector’s index gained 0.5 percent and agriculture and food sector rose 1.1 percent.
Banking shares meanwhile, weighed with the sector falling 0.5 percent, its fifth straight drop since it hit a five-year high last week.
Aside from profit-taking, weak fourth-quarter outlook and unattractive dividends for banks earnings triggered investors to sell shares.
Samba Financial Group was the main drag on the bourse, losing 3.9 percent. The lender Thursday said it would pay 0.85 riyals ($0.23) per share for the second half of 2013.
“There are two main concerns on banks – that higher provisions will be allocated in Q4 due to difficulties in the construction sector,” said Hesham Tuffaha, a Riyadh-based fund manager.
Saudi Arabia’s crackdown on illegal workers is resulting in shortage of laborers, which is hitting hard the construction sector, analysts said. Banks that lend to construction firms, may see an impact from delayed interest payment due to a slowdown in projects.
Additionally, weak growth in the banks earnings means lack of growth in dividend payouts, Tuffaha said, which is also triggering selling in banking shares.
In Qatar, Gulf International Services climbed 0.2 percent. The firm said in a bourse statement it was in discussions with Gulf Drilling International, a foreign partner in its joint venture, to acquire a 30 percent stake in the capital of GDI. The acquisition would result in GDI becoming a wholly owned subsidiary of GIS.
Doha’s benchmark declined 0.3 percent in its third consecutive retreat ahead of a new listing next month.
Elsewhere, Cairo’s benchmark index fell 0.6 percent, its second decline since Wednesday’s near-three-year-high.