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Gulf markets rally modestly on Greece – MIDEAST MARKETS REPORT

DUBAI: Gulf bourses rose yesterday in line with a global equities rally due to the Greek bailout agreement, but a drop in oil prices because of a likely Iran nuclear deal limited gains in the region. Brent crude fell 1.8 percent as Tehran and six world powers were on the brink of finding a nuclear deal that would bring sanctions relief and more oil to the already oversupplied market. Saudi Arabia’s bourse, the most sensitive in the Gulf to oil prices because of its heavyweight petrochemical sector, was the weakest performer yesterday and edged up just 0.2 percent.

The petrochemical sector index fell 0.4 percent, although that was to a large extent because of Saudi Arabia Fertilizers Co (SAFCO), which dropped 3.1 percent as it went ex-dividend.

But other sectors were mostly positive, supported by some strong second-quarter earnings. Food maker National Agriculture Development Co surged 5.9 percent after posting a 25.4 percent year-on-year increase in quarterly profit. National Shipping Co of Saudi Arabia (Bahri) added 0.9 percent. It said after trading closed that its second-quarter net profit more than doubled thanks to increased fleet size and rates for transporting spot crude.

UAE, Egypt
The region’s biggest gainer of the day was Dubai which, as a regional logistics and financial hub, could benefit the most from increased foreign trade and investment in Iran if the sanctions are lifted. The emirate’s index rose 0.9 percent with most stocks positive.

Heavyweights Emaar Properties and Dubai Islamic Bank added 2.1 and 1.5 percent respectively. Neighbouring Abu Dhabi’s bourse gained 0.6 percent and Qatar edged up 0.4 percent. But oil-sensitive stocks in both markets were weak. Abu Dhabi National Energy Co tumbled 6.9 percent and petrochemicals giant Industries Qatar lost 0.7 percent.

The more positive news on Greece boosted global appetite for risk so investors from outside the region were net buyers on all major markets in the Middle East, data from local bourses showed. But their buying failed to support Egypt’s market, which fell 1.4 percent as local investors resumed a sell-off, after a drop in trading volume in the previous session indicated that the market’s rally was faltering.

The Cairo benchmark had risen in the two previous days after sinking to a one-year low on concerns over exchange rates, security and an energy shortage. The property sector came under particularly heavy pressure yesterday. Palm Hills Development tumbled 4.8 percent and Medinet Nasr Housing lost 4.5 percent. —Reuters

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This article was published on 13/07/2015