June 14, 2017 / 1:19 PM / 7 months ago

MIDEAST STOCKS-Saudi banks strong before Fed; Qatar bounces, Dana Gas volatile

* Nine of 12 Saudi banks up before U.S. monetary policy meeting

* Qatar rebounds, foreign funds slow pace of selling

* DXBE lifts Dubai after corporate reshuffle

* Dana Gas down in volatile trade

* Qalaa Holdings pulls back in Egypt

By Celine Aswad

DUBAI, June 14 (Reuters) - Most major stock markets in the Gulf rose on Wednesday as shares in Qatar picked up and Saudi Arabian banks rose on expectations for a U.S. interest rate hike later in the day, which Riyadh would most probably imitate.

“Higher interest rates mean higher net interest margins and with the economy now coming off a slowdown and with better liquidity levels in the market, banking shares have performed well today,” said a Riyadh-based fund manager.

Saudi Arabia tends to follow U.S. interest rate moves because its currency is pegged to the dollar.

Nine of the 12 listed lenders rose, helping lift the Saudi stock index 0.5 percent.

In terms of valuations, banks are trading at a slight discount to the Saudi market and are considered cheap when compared to their regional counterparts, according to analysts at HSBC.

They said Saudi banks would also be important financial intermediaries in Riyadh’s privatisation programme, which is at the centre of Saudi economic reform plans.

“If 70 to 100 percent of such volumes are funded by the banks over a three-year period, sector loan growth could improve by 7 to 9 percentage points,” said HSBC.

National Commercial Bank rose 2.9 percent to 44 riyals. HSBC rates the stock a “buy” with a target of 47 riyals.

Qatar’s index, beaten down in recent days by other Gulf states’ economic sanctions against the country, rebounded 1 percent in a broad rally. Qatar National Bank rose 0.6 percent.

Foreign funds remained net sellers on Wednesday but their pace of selling has been slowing since last week. Non-Qatari Gulf investors remained net sellers.

The index is down 7.4 percent since the sanctions were launched on Monday last week.


Abu Dhabi’s index was almost flat as Dana Gas fell 1.4 percent in heavy trade to 0.68 dirham, off an intra-day high of 0.77 dirham.

The stock had surged 15 percent on Tuesday, when Dana proposed restructuring its $700 million of outstanding Islamic bonds at much cheaper rates and without the option of converting to shares. On Wednesday, it said it had obtained an injunction in a Sharjah court blocking claims on its existing sukuk.

Dubai’s index rose 0.3 percent as theme park operator DXB Entertainments, which has been hit by disappointing visitor numbers at its parks, climbed 5.5 percent after announcing a new management structure.

It said strategy and business development would be incorporated into a newly structured finance function, and appointed a new chief financial officer, John Ireland, who was previously CFO at Arab Media Group.

Egypt’s index edged down 0.2 percent; private equity firm Qalaa Holdings fell 2.4 percent.



* The index rose 0.5 percent to 6,854 points.


* The index advanced 0.3 percent to 3,451 points.


* The index edged down 0.04 percent to 4,536 points.


* The index rebounded 1.0 percent to 9,190 points.


* The index fell 0.2 percent to 13,502 points.


* The index edged up 0.04 percent to 6,779 points.


* The index edged down 0.03 percent to 1,327 points.


* The index lost 0.2 percent to 5,301 points. (Editing by Andrew Torchia and Susan Fenton)

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