Oil aids most Gulf bourses, Egypt lifted by foreign funds

Shares in most Gulf bourses were firm yesterday as oil prices held near this year’s highs, while Egypt’s stock index climbed as international funds flowed back into the market. Saudi petrochemical shares were strong with the sub-index rising 1.3 percent, its fifth straight session of gains. The main stock index rose 0.6 percent.

Etihad Etisalat (Mobily) jumped 4.6 percent after it said lenders who had not already agreed in December to waive breaches in loan terms had now done so. Najran Cement climbed 2.1 percent after it announced its board had approved the creation of a new mining company, although it still needs approval from authorities. It did not give details, but developing the mining industry is a major plank of Saudi Arabia’s economic reform plan.

In Cairo, the main index jumped 1.9 percent on the heaviest volume for almost four weeks as international funds bought Egyptian shares, bourse data showed. Commercial International Bank, Egypt’s largest listed lender, rose 1.6 percent to 44.48 pounds. Earlier this week the bank reported a 17 percent rise in net income to 1.29 billion Egyptian pounds ($145.3 million).

“The bank has impressed on lower provisioning, higher deposit growth and if the sale of its investment arm CI Capital to Beltone Financial is concluded in Q2 2016, the transaction should result in a sizeable capital gain of 500 million pounds,” said a note by Cairobased Naeem Brokerage, rating the stock a “buy” with a target price of 51.28 pounds. Another financial firm, EFG Hermes <HRHO.CA,> surged 9.0 percent. Last week the company reported a net loss of 128 million Egyptian pounds in the first quarter, due in large part to the reclassification of its stake in a Lebanese bank, Credit Libanais. But EFG’s core investment baking arm reported a net profit of 79 million pounds, an 18 percent rise. “Although we expect a slowdown in brokerage volumes because of the lower activity in Ramadan, we believe that the second quarter of 2016 will be just as strong, especially with the acquisition of the micro finance player Tanmeyah,” said Nancy Fahmy, an analyst at Beltone Financial.

In Dubai the index added 0.4 percent with help from blue chip Emaar Properties, which climbed 2.3 percent. Arabtec closed flat at 1.45 dirhams; it gained as much as 2.8 percent during the day after it said its June 1 general assembly would aim to approve a plan to use “all the statutory reserve to extinguish part of the company’s losses”. It gave no details. The company has reported losses in the past six quarters, which it blamed on increased costs and tough market conditions. In the last few days analysts at Deutsche Bank cut their price target for Arabtec to 1.11 dirhams from 1.14 dirhams while maintaining a “hold” rating, and EFG Hermes raised its target to 1.13 dirhams from 1.07 dirhams while keeping a “sell” rating.—Reuters