MIDEAST STOCKS-Saudi Telecom lifts index with strong Q4 earnings

Reuters Middle East

By Nadia Saleem

DUBAI, Jan 21 (Reuters) - Saudi Arabia's telecom sector helped lift the bourse on Tuesday after Saudi Telecom Co (STC), its second biggest firm by market value, posted an earnings surge. Most other regional markets also gained.

STC beat analysts' estimates as it made a net profit of 3.62 billion riyals ($965 million), up from 393 million riyals in the prior-year period. Analysts on average forecast STC's profit would be 2.51 billion riyals.

Although the profit jump was mainly due a change in STC's method of accounting for an Indian unit, Saudi retail investors tend to look at headline numbers.

"The main reasons for the strong reported net income are the increased cost efficiencies, which commenced in third quarter 2013," Abdulelah Babgi, an analyst at NCB Capital in Riyadh, said in a note. "This is coupled with an improvement in income from associates."

The company also proposed a fourth-quarter dividend of 0.75 riyals per share, up from 0.5 riyals in the previous quarter, which helped boost the stock.

Shares in STC jumped 5.5 percent to their highest since October 2008. Kuwait-based NBK Capital, however, cut the stock to sell from hold on Tuesday.

Petrochemical shares limited gains on the Saudi bourse as firms continued to post weaker-than-expected earnings.

National Industrialization (Tasnee) fell 2.2 percent after the firm reported a 24 percent rise in fourth-quarter net profit which stood at 300 million riyals.

It missed the NCBC estimate of 448 million riyals and the market consensus of 413 million riyals.

Saudi Basic Industries Corp (SABIC) slipped 2.2 percent to its lowest in January and extended declines since posting earnings that missed analysts' forecast.

The wider index ticked up 0.08 percent, its first gain this week. The index had been retreating after hitting a five-year high last Thursday.

In Dubai, the bourse ended an eight-session winning streak in a bout of profit-taking as investors await fourth-quarter earnings.

It slipped 0.1 percent to 3,665 points, coming off a five-year high. It is testing technical resistance at 3,625 points, the low of April 2007; a weekly close above that level would confirm a break.

"The Dubai market in now in a resistance zone where there is a good chance selling pressure will increase," said Bruce Powers, technical analyst and president at WideVision. "A drop below today's low at 3,658.48 is the next sign of weakness that could lead to further selling. Given today's weak behavior, a break above today's high this week will be suspect whether the market can keep going."

Abu Dhabi's measure climbed 0.2 percent.

In Qatar, Barwa Real Estate jumped 3.3 percent after the firm said it would sell its 37.34 percent stake in unlisted Barwa Bank for 2.39 billion riyals ($656 million).

The sale is part of a wider deal to help the property developer cope with its debt burden, but still requires government approval.

The move will reflect positively on BRE's fourth-quarter results for 2013, the company said in a statement on Tuesday.

Large-caps rose in late trade, helping lift Doha's index by 0.7 percent to its highest since August 2008.

Elsewhere, Kuwait's bourse gained 0.2 percent, up 2.7 percent in January but underperforming most of its Gulf peers.

Retail investor confidence remains weak after government action in 2013 on a massive development plan did not meet expectation.

"We expected the market sentiment to change in light of expectations of better earnings for the financial sector, which is the biggest sector, but investors are still not confident," said Fouad Darwish, head of brokerage at Global Investment House.

"Day traders are not helping by causing swings in smaller stocks, while large-caps take a back seat."

The Kuwait 15 index, which represents the major stocks, is up 0.6 percent in January, significantly underperforming the wider market.

Darwish said that with fourth-quarter earnings reports due in the coming weeks, investors could start shifting towards blue chips.

Shares in National Bank of Kuwait rose 2.3 percent to a two-month high and and were up for a second session since Reuters reported veteran banker Isam al-Sager was the most likely candidate to become the new group chief executive.

He would succeed Ibrahim Dabdoub who is retiring from the post after three decades, sources with knowledge of the matter said.

In Egypt, the benchmark index rose 0.7 percent, while Oman's measure added 0.2 percent.

TUESDAY'S HIGHLIGHTS

SAUDI ARABIA

* The index edged up 0.08 percent to 8,734 points.

QATAR

* The index rose 0.7 percent to 11,147 points.

KUWAIT

* The index gained 0.2 percent to 7,756 points.

DUBAI

* The index slipped 0.1 percent to 3,665 points.

ABU DHABI

* The index gained 0.2 percent to 4,581 points.

EGYPT

* The index rose 0.7 percent to 7,087 points.

OMAN

* The index advanced 0.2 percent to 7,176 points.

BAHRAIN

* The index slipped 0.3 percent to 1,277 points. (Editing by Olzhas Auyezov)

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