Arab stocks slip on weak quarterly earnings, global woes

Oct 30, 2009, 10:52 GMT

Amman - Arab stock markets lost ground this week reflecting investors' worries over third quarter earnings of listed firms and the fragile global recovery, financial analysts said Friday.

However, they expected regional bourses to rebound in response to reports released on Thursday that the US economy had grown at an annual rate of 3.5 per cent in the third quarter, a much higher pace than previously expected.

'I think Arab stock markets will respond positively to the announcement that the US economy has returned to growth, signalling the end of the recession,' Wajdi Makhamreh, Chief Operating Officer at the Amman-based Sanabel International Holding, told the German Press Agency dpa.

He expected oil prices and performance of global stock markets to continue to have a 'psychological' impact on regional bourses in the coming weeks.

'Higher oil prices will mean larger surplus petrodollars that seek investment outlets particularly at Middle East stock markets,' Makhamreh said.

Saudi shares remained steady this week after the release of all third quarter results, with investors awaiting fresh moving factors to decide the composition of their portfolios.

The Tadawul All Share Index (TASI) of the Arab world's largest stock exchange shed 1.1 per cent this week, closing at 6,441.60 points.

TASI is currently 34.1 per cent higher than the year's star, according to the weekly report of the Riyadh-based Bakheet Investment Group (BIG).

The BIG expected investors to be 'eyeing global stock markets, the movement of oil prices and any other essential information that might affect the Saudi market in the coming weeks'.

Jordanian shares remained under selling pressure this week amid continued liquidity shortage and lack of foreign buying, Makhamreh said.

The marked retreat in quarterly earnings of blue chips, particularly in the mining sector, helped to perpetuate the lack of confidence that characterized the Amman Stock Exchange (ASE) over the past weeks, he added.

The ASE all-share index lost 0.32 per cent this week, to close at 2,616 points, according to the market's weekly report.

Kuwaiti stocks plunged for the third week in a row despite profits declared by blue chips, particularly in the banking sector.

Kuwait's KSE all-share index plummeted 3.4 per cent this week, closing at 7,347 points.

The decline was attributed by Kuwaiti analyst Fahd Bassam to a number of factors, including investors' dissatisfaction with third quarter earnings and ambiguity that still surrounds local and global economies.

The benchmarks of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi also declined by 2.1 per cent and 3 per cent, to close respectively at 2,198 points and 3,019 points.

Egypt's AGX30 index, measuring the performance of the market's 30 most active stocks, shed 1.6 per cent this week, closing at 6,962 points, mainly due to selling pressures.