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Oil's rebound, earnings lift Gulf; SABIC up despite Q4 profit slide

Reuters , Sunday 18 Jan 2015
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Gulf stock markets rose on Sunday after companies published mostly positive quarterly earnings and oil prices extended gains. Saudi Arabia's biggest listed company gained despite poor earnings, a fresh sign that the market may have bottomed.

Oil ended last week higher after seven successive weeks of losses, with Brent slightly above $50 a barrel. A report by the International Energy Agency said there were signs that lower prices had begun to curb production in some areas, including North America.

Saudi Arabia's equities benchmark rose 0.9 percent and Saudi Basic Industries (SABIC) climbed 1.1 percent to 79.25 riyals after falling as much as 1.1 percent in the opening minutes.

SABIC, one of the world's largest petrochemicals groups, reported a 29 percent drop in fourth-quarter net income to 4.36 billion riyals ($1.16 billion), while analysts polled by Reuters had expected 5.50 billion riyals. SABIC chief executive Mohamed al-Mady said the outlook for 2015 depended on oil prices and remained unpredictable.

But by the end of last week, the stock had plunged 42.4 percent from its September peak of 136.00 riyals, and the market was already factoring in the possibility of earnings undershooting analysts' estimates. This suggests it would take a much bigger drop in oil prices to send the Saudi stock market back into a downtrend.

Shares in Alinma Bank added 0.7 percent after its fourth-quarter net profit rose 18.6 percent to 332 million riyals, coming well ahead of analysts' average estimate of 291 million riyals.

Construction firm Abdullah Abdul Mohsin al-Khodari and Sons surged 5.0 percent after it reported a five-fold increase in fourth-quarter net profit and announced its project pipeline had expanded. The earnings jump may indicate that the negative impact on companies of Saudi Arabia's labour market reforms is easing.

Aldrees Petroleum and Transport Services Co jumped 3.8 percent; the company's 2014 net profit met the forecast of EFG Hermes analysts and its board proposed a dividend of 2.0 riyals per share, higher than the broker's estimate of 1.5 riyals.

UAE, EGYPT

Dubai's bourse added 1.5 percent. Emirates NBD , Dubai's largest bank, jumped 2.2 percent in thin trade after it reported an 82 percent leap in fourth-quarter net profit, broadly in line with analysts' forecasts.

Another Dubai bank, Mashreq added 2.3 percent after reporting a 28 percent rise in fourth-quarter net profit, also in line with estimates.

Abu Dhabi's index climbed 1.7 percent as shares in National Bank of Abu Dhabi surged 4.2 percent. The bank is forecast to report a 20 percent rise in fourth-quarter profit, according to four analysts polled by Reuters.

Islamic lender Masraf Al Rayan and Industries Qatar, up 1.4 and 0.8 percent respectively, helped lift the Doha index 0.5 percent. Marsaf Al Rayan will report earnings next week and analysts expect its foruth-quarter profit to rise 18.4 percent.

Industries Qatar, the Gulf's second-largest petrochemicals firm, said on Thursday it was considering increasing production to use excess feedstock left by the cancellation of a joint project by Qatar Petroleum and Shell.

Egypt's index slipped 0.3 percent to 9,531 points after failing for a second straight day to break through major technical resistance at 9,572-79 points, the peaks in November and December.

However, shares in Ezz Steel jumped 2.1 percent after the firm said its board had approved a loan deal with several banks. It did not disclose the size or any other terms, but Egyptian newspaper Shorouk reported last week that Ezz Steel was seeking a 2 billion Egyptian pound ($278 million) loan, its biggest since 2011.

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