Qatar, Saudi fall on Q2 earnings misses

Egyptian pound sinks further in black market

DUBAI, July 20, (RTRS): Stock markets in Qatar and Saudi Arabia were pulled lower on Wednesday by two blue-chip companies whose weak second-quarter earnings missed forecasts, while Egypt was hurt by a fresh slide of its currency in the black market.

Commercial Bank of Qatar slumped 6.6 percent after it posted a 63 percent drop in second quarter net attributable profit to 212.3 million riyals ($58.3 million); analysts polled by Reuters had forecast 339.5 million riyals.

Other Qatari banks also fell, even though they had reported strong earnings at the start of this week. Qatar Islamic Bank dropped 1.6 percent. The main Qatari index dropped 0.5 percent to 10,592 points, but closed 81 points above its session low.

In Saudi Arabia, Saudi Electricity Co (SEC) dropped 0.5 percent after it reported a 28 percent fall in second-quarter net profit to 1.4 billion riyals ($381 million). Analysts at NCB Capital had forecast 2.4 billion riyals.

SEC cited the higher cost of fuel and depreciation of assets, without elaborating. The kingdom’s 2016 state budget contained hikes in fuel and electricity prices but the company had previously said these would not have a significant effect on its earnings overall.

The main Saudi index edged down 0.2 percent. But some Saudi banks fared well after several reported earnings that met expectations. Saudi Hollandi Bank rose 0.8 percent after reporting a flat net profit of 540 million riyals, beating the average analyst forecast of 508 million riyals.

In Egypt, the main index extended the previous day’s decline and dropped 1.2 percent after the Egyptian pound weakened to 11.75 per dollar on the black market, its lowest level since that market emerged.

The central bank has been keeping the currency artificially fixed at 8.78 pounds since its devaluation in mid-March. Since the central bank’s comments to local media on July 3 about the fixed currency rate being a “mistake”, the pound has tumbled in the black market, and economists believe a further devaluation - possibly accompanied by further interest rate hikes - may be imminent.

The March devaluation triggered a strong rally in the stock market on hopes that it would prompt foreign fund inflows, but that largely did not happen, so investors are more gloomy this time around.

Nine-tenths of traded shares declined on Wednesday with heavily traded Orascom Telecom dropping 3.6 percent. Ezz Steel, hit by the country’s gas shortage, sank 3.9 percent after it reported its first-quarter net loss widened from a year earlier.

In Dubai, Emaar Properties climbed 1.7 percent to 7.02 dirhams, its highest close in 11 months, in active trade.

It closed above technical resistance on its October 2015 peak of 7.01 dirhams; another such close on Thursday would trigger a reverse head and shoulders pattern formed by the highs and lows since last August and pointing up in the long term to at least the April 2015 peak of 8.39 dirhams.

“Passive emerging market funds, which have been underweight the region, are now accumulating shares in companies such as Emaar to ensure equal weights,” said a Dubai-based equity portfolio manager.

Buying of Emaar was also encouraged this week by local consultancy ValuStrat saying the Dubai real estate market had a good chance of starting to recover in the second half of 2016, although many other analysts think property prices have further to fall.

Dubai’s main stock index added 0.6 percent on Wednesday. Abu Dhabi’s index climbed by the same margin with support from large-caps; Aldar Properties, the largest listed property developer in Abu Dhabi, jumped 4.3 percent.

Qatar

The index fell 0.5 percent to 10,592 points.

Saudi Arabia

The index dropped 0.2 percent to 6,631 points.

Egypt

The index declined 1.2 percent to 7,503 points.

Dubai

The index added 0.6 percent to 3,547 points.

Abu Dhabi

The index advanced 0.6 percent to 4,612 points.

Kuwait

The index rose 0.2 percent to 5,379 points.

Oman

The index dropped 0.4 percent to 5,817 points.

Bahrain

The index fell 0.4 percent to 1,158 points.