Tadawul index hits a month high

[Chief Editor]

Tadawul index hits a month high

By ARAB NEWS
Published: Jul 27, 2010 23:32 Updated: Jul 27, 2010 23:32





JEDDAH/DUBAI: Abu Dhabi's Sorouh Real Estate tumbled to a four-year closing low on Tuesday after the developer reported a sharp drop in second-quarter profit, the latest firm in the United Arab Emirates to miss estimates.


Most Middle East markets advanced, with Saudi Arabia the standout performer as the Kingdom's bourse hit a month high, rising for a third day in four.

Sorouh fell 2.8 percent to 1.73 dirhams, its lowest finish since at least December 2005, after quarterly profit plunged due to a lack of land sales.

"There were no 'income smoothing' events this quarter to boost profits," Chet Riley, Nomura property analyst wrote in a note to clients.

"We think this is the profit 'trough' for Sorouh. The balance sheet is less strained now and the recent refinancing has more accurately matched cash inflows and outflows so market concerns regarding liquidity should be dampened."
Nomura cut its price target for Sorouh by 9 percent to 3.87 dirhams, but maintained a buy rating.


DP World climbed 6.4 percent after the ports operator said container volumes rose 7 percent in the first half of 2010.
"DP World volumes were better than expected and implies higher revenues and profitability than we have anticipated if the company maintains its margins and increases cost savings," said Kareem Murad, an analyst at SHUAA Capital.

Shuaa's outstanding fair value for DP World is $0.61, implying a significant upside for the stock, although low trading volumes may scupper any rally in the short term.
The Dubai index fell 0.7 percent to 1,499 points. The Abu Dhabi index edged up 0.05 percent to 2,561 points.
Saudi Arabia's Tadawul All-Share Index (TASI) climbed 0.93 percent to 6,274.95 - its highest close since June 28.


Volumes also hit a month high. The sector activity was positively biased with all sectors closing with gains except the Insurance sector closing with a minor loss of 0.32 percent. The gaining sectors for the day however ranged from 0.08 percent by the Transport sector to 2.59 percent by the Media & Publishing sector. The overall market breadth for the day was also positive with 104 advancers against 22 decliners giving it an AD ratio of 4.72, the Financial Transaction House (FTH) said in its daily market commentary.

Al-Rajhi Bank rose 1.6 percent, Saudi Electricity Co. added 1.5 percent and Rabigh Refining and Petrochemical Co. gained 2.4 percent.

"Some of the Saudi names are still oversold - volumes have been quite light for the past couple of weeks, so we're now seeing a retracement of cash from other regional markets back into Saudi," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading. "Banks look steady and there's an increase in interest at these levels."


Etihad Etisalat (Mobily) rose 0.5 percent to a fresh 29-month closing high and dairy firm Almarai is another on investors' shopping lists, said a Riyadh-based trader who asked not to be identified. Almarai rose 0.4 percent.


"These domestic names have more visibility in terms of likely earnings for the rest of 2010 compared to globally-focused companies," he said.


Kuwait's Gulf Bank ended flat at a month-high after swinging to a second-quarter profit.


"Gulf Bank made a significant move upward prior to its results," said a Kuwait trader who asked not to be identified.
Kuwait's index climbed 0.5 percent to 6,685 points, its fifth straight gain.


"It's too early to say investors have formed a clear sentiment about Q2 earnings - most people are sitting on the sidelines," said the trader. "The market is moving forward, but it needs to correct a bit, so I expect to see some profit taking in the near future."


The Qatari index climbed 0.3 percent to 6,938 points.

- With input from agencies