* Saudi’s Al Tayyar extends gains on MSCI index inclusion
* Mobily falls after insider trading case referred to prosecution
* Dubai construction firms drop on poor Q1 earnings
* New MSCI picks in Qatar surge further
* Concern that Egypt might eventually be dropped from index
By Olzhas Auyezov
DUBAI, May 14 (Reuters) - Middle East stock markets continued on Thursday to digest index compiler MSCI’s semi-annual review, which was positive for most Gulf markets but sent Egypt’s bourse to a five-month low.
Another positive factor for the Gulf was news that a truce in Yemen was holding, despite some minor incidents.
Saudi Arabia’s main index edged up 0.6 percent as blue-chip lenders Al Rajhi Bank and National Commercial Bank rose 2.4 and 1.5 percent respectively.
Petrochemicals giant Saudi Basic Industries jumped 2.2 percent even as oil prices swung between gain and loss on worries about global economic growth.
Al Tayyar Travel Group rose 1.8 percent. MSCI on Tuesday published a standalone index for Saudi Arabia; the stock’s addition was the only change from a provisional Saudi benchmark published last year.
Saudi Arabia will open its stock market to the first wave of qualified foreign investors on June 15, although analysts expect fund inflows to be slow and gradual.
Meanwhile, telecommunications firm Etihad Etisalat (Mobily) fell 1.2 percent after the kingdom’s Capital Market Authority said it had referred a case of suspected insider trading at Mobily to public prosecutors.
The regulator said procedures relating to other suspected violations involving Mobily were ongoing. Also on Wednesday, Mobily said it was studying possibility of selling its telecommunications towers but had not reached any agreement yet. It was commenting on a Wall Street Journal report saying the firm planned to sell the towers for $2 billion.
Qatar’s index was the top performer in the region for a second day in a row, climbing 1.2 percent as property developer Ezdan Holding surged its daily 10 percent limit and Qatar Insurance rose 7.4 percent.
MSCI added both stocks to its emerging markets index for the first time on Tuesday, surprising some analysts who said the move may have to be reversed because the stocks lack liquidity.
Brokerage VTB Capital has estimated that index inclusion will result in passive fund inflows of $59 million into Ezdan and $26 million into Qatar Insurance. Active inflows could be more than seven times greater.
Abu Dhabi Commercial Bank, whose weighting in MSCI’s index was increased, climbed 1.3 percent and was the main support for the emirate’s bourse, which edged up 0.3 percent.
Developer Aldar Properties rose 0.4 percent after it posted a 36 percent rise in first-quarter net profit on lower costs and strong earnings from its rental business. The company made 618 million dirhams ($168.3 million) in the quarter, while SICO Bahrain had forecast a profit of 509 million dirhams.
Dubai’s index lagged, inching up just 0.1 percent as construction companies Drake and Scull International (DSI) and Arabtec fell 3.0 and 1.2 percent.
DSI reported a 38 percent drop in first-quarter profit on Thursday, missing an analyst’s estimate as revenue fell, and it warned that difficulties in Saudi Arabia would affect its performance this year.
The firm also complained about a liquidity crunch in the industry, a day after Arabtec posted a surprise first-quarter loss.
Egypt’s market dropped 2.6 percent to a five-month low of 8,303 points, extending losses after MSCI’s decision to exclude Telecom Egypt from its emerging markets index.
Telecom Egypt tumbled 6.7 percent on Thursday after falling its daily 10 percent limit in the previous session, and many other Egyptian stocks also fell sharply.
With only three Egyptian companies - Commercial International Bank (CIB), Talaat Moustafa Group and Global Telecom - left in the MSCI index, some analysts have said the country risks eventually being excluded from the benchmark completely.
This concern has offset all the positive impact from Egyptian first-quarter earnings, said Harshjit Oza, an analyst at the Cairo-based Naeem brokerage.
“Fundamentally, companies have been doing very well,” he said.
CIB on Wednesday reported a 38 percent rise in first-quarter profit, which was in line with the average estimate of analysts surveyed by Reuters.
Talaat Moustafa, a property firm, posted a 17 percent increase in quarterly profit, which was broadly in line with Naeem’s forecast.
Egypt’s benchmark has strong technical support at 8,125 points, its December low.
* The index rose 0.6 percent to 9,732 points.
* The index inched up 0.1 percent to 4,073 points.
* The index climbed 0.3 percent to 4,630 points.
* The index rose 1.2 percent to 12,516 points.
* The index dropped 2.6 percent to 8,303 points.
* The index slipped 0.4 percent to 6,357 points.
* The index rose 0.8 percent to 6,362 points.
* The index slipped 0.1 percent to 1,392 points. (Editing by Andrew Torchia)