Strong company results support Saudi stocks but Ramadan could disturb third quarter results

Saudi Arabia’s shares lead gains on Gulf Arab bourses as improving sentiment on global markets supports.

The benchmark rises 0.8 percent to 6,490 points, up for a second-day since Monday’s four-week low.

Strong company results and hopes for a settlement in the United States debt ceiling row boosted global equities on Wednesday, while the euro rose on hopes for a scheme to address the Greek debt crisis.

Kingdom Holding gains 1.9 percent after the investment firm’s quarterly profit rose 21 percent. It made a second-quarter profit of 163.5 million riyals ($43.6 million), thanks mostly to income from investments and dividends.

“Technically, the market is very strong,” says Youssef Kassantini, a Saudi-based financial analyst. “The banking sector is recuperating and we’re expecting even stronger results in the third and fourth quarter,” he adds, but warning the slower business period of Ramadan would affect the results in the third quarter.

Bucking the upbeat trend, Rabigh Refining and Petrochemical Co tumbles six percent. It posted a second-quarter loss of $107 million after a two-month closure of its refinery slashed sales.

Most other petrochemicals gain, with Saudi Basic Industries Corp (SABIC) up 2.4 percent and the sector’s index climbing 1.3 percent.

Dubai’s index ends higher for a first session in five, but a sustained rebound is seen unlikely, with investors reluctant to commit more cash to UAE markets until after the Muslim holy month of Ramadan.

Dubai Islamic Bank is the main support, rising one percent, while courier Aramex adds 1.7 percent and property developer Deyaar adds 2.6 percent.

The index climbs 0.3 percent to 1,526 points, easing from Tuesday’s three-week low.

“People here think they can still afford to wait until after Ramadan,” says Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.

“We need to see a strong catalyst; otherwise the markets will continue to move sideways.”

Ramadan is due to start in early August, with trading activity typically slumping during the holy month, while volumes are already low as many traders and investors go on vacation to escape the scorching summer heat.

Abu Dhabi’s index falls 0.4 percent to 2,688 points. Telecoms carrier Etisalat drops 0.5 percent to a six-week low, extending losses since it reported declining quarterly profit.

Qatar’s benchmark rises 0.1 percent to 8,388 points.

Kuwait’s mid-cap banks rise, helping the oil exporter’s share index gain for a second day since Monday’s seven-year low, although sentiment remains subdued amid worries about the country’s economy.

Ahli United Bank climbs 5.6 percent, Boubyan Bank rises 1.7 percent and Al Ahli Bank adds 1.5 percent.

National Bank of Kuwait, the largest lender by market value, drops 3.6 percent.

The index climbs 0.5 percent to 6,034 points, rising for a second day since Kuwait’s fledgling regulator gave investment funds until March 2012 to impose a cap on their ownership in individual financial securities.

“Valuations are attractive from a historic point of view, but not compared to the rest of the region,” says Sebastien Henin, portfolio manager at The National Investor in Abu Dhabi.

“People are a bit fed up and are booking profit.”

OPEC member Kuwait needs to correct imbalances in its economy, the country’s central bank governor said on Sunday.

Meanwhile, Oman’s index ends lower, dropping 0.3 percent to 5,942 points, its seventh decline in eight sessions.