February 18, 2018 / 2:36 PM / a year ago

MIDEAST STOCKS-Dubai underperforms in sluggish region, rate cut boosts Egypt

* Dubai hit by weak property prices, mediocre quarterly earnings

* Money flowing from Dubai to Saudi, some fund managers say

* But Aramex continues rebound after strong results

* Many Saudi insurers weak after earnings

* Egypt blue-chip index outperforms broad market

By Andrew Torchia

DUBAI, Feb 18 (Reuters) - Dubai’s stock market again underperformed in a sluggish Gulf on Sunday while local institutional investors boosted Qatar and Egypt rose after an interest rate cut at the end of last week.

Slumping real estate prices have weighed on Dubai’s bourse in recent months, and mostly mediocre fourth-quarter earnings released in the past fortnight have worsened liquidity.

Meanwhile, some fund managers say money is already rotating out of Dubai to Saudi Arabia, which is anticipating an upgrade to emerging market status by index compiler MSCI and the listing of oil giant Saudi Aramco late this year.

“There’s no strong reason to put money into Dubai at the moment, so it’s going elsewhere,” said one regional equity analyst.

The Dubai index fell 1.2 percent in thin trade to its lowest level since November 2016 as real estate blue chip Emaar Properties sank 2.6 percent and Shuaa Capital lost 7.2 percent.

One of the few bright spots was courier Aramex, which added 2.2 percent to 4.75 dirhams. It has been rising since it reported strong fourth-quarter earnings last week; on Sunday it confirmed a break of resistance on the January peak of 4.55 dirhams, triggering a double bottom formed by the December and February lows and pointing up to around 5.0 dirhams.

The stock plunged late last year as senior executives left the company but in a note, Al Mal Capital Asset Management said it was comfortable with the transition to a new chief executive and that the company was well placed to take a large share of the fast-growing regional e-commerce sector.

“It is rare to find strong growth profile trading at attractive valuations; Aramex is one of them and we believe there is a lot of upside,” Al Mal said.

In Abu Dhabi, the index edged up 0.1 percent as Abu Dhabi National Energy Co jumped 4.7 percent; it has been strong since announcing a week ago that it swung to an annual profit.

In a move that could attract fresh money to United Arab Emirates equity markets in the long run, the Nasdaq Dubai exchange launched futures contracts on Sunday covering the main indexes of Dubai Financial Market and the Abu Dhabi Securities Exchange.

Saudi Arabia’s index edged down 0.03 percent, dampened partly by weak insurance shares after some insurers posted lower fourth-quarter earnings. Buruj Cooperative Insurance sank 8.5 percent after reporting a 62 percent decline in fourth-quarter net profit.

But Qatar gained 0.6 percent. Exchange data showed Qatari institutional investors were net buyers of stocks in a ratio of almost three to one, offsetting net selling by foreign investors.

Egypt’s blue-chip index climbed 0.5 percent after the central bank announced a 1 percentage point rate cut that exceeded the median expectation. Six of 10 economists polled by Reuters had predicted such a cut but two had forecast only half a percentage point and two had expected no cut.

Real estate firms led the index up because their business could benefit directly from lower interest rates. SODIC surged 5.2 percent. But the broader market index barely moved, edging up just 0.1 percent.

Arqaam Capital said that with inflation falling, Egypt should have room to cut rates by a further percentage point in March and by 2 percentage points in August.

The broader market index barely moved, however, edging up just 0.1 percent.


* Index edged down 0.03 percent to 7,508 points.


* Index fell 1.2 percent to 3,292 points.


* Index edged up 0.1 percent to 4,582 points.


* The index climbed 0.6 percent to 9,079 points.


* Index gained 0.5 percent to 15,046 points.


* Index dropped 0.6 percent to 6,721 points.


* Index slipped 0.5 percent to 1,333 points.


* Index edged down 0.04 percent to 5,014 points.

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