Abu Dhabi Stocks Slip on Speculation Earnings Rally Overdone

Abu Dhabi shares dropped to the lowest level in almost a week as investors speculated a rally this year prompted by higher 2012 results was overdone and after crude oil prices fell in New York.

First Gulf Bank PJSC, the lender whose shares have surged 16 percent year-to-date, declined 0.7 percent. Sorouh Real Estate Co., Abu Dhabi’s second-largest property developer, dropped for the second time in three days. The ADX General Index decreased 0.3 percent to 3,036.64 at the close in the United Arab Emirates capital, its lowest level since Feb. 26. Dubai’s DFM General Index gained 0.4 percent.

Some of Abu Dhabi’s biggest listed companies including First Gulf, whose 2012 net income grew 12 percent, posted full-year profit that beat estimates. The earnings helped boost the emirate’s gauge 15 percent this year, pushing the 14-day relative strength index to 72. A reading above 70 indicates to some analysts that a security or index is poised to drop. The MSCI Emerging Markets Index has declined 0.2 percent in 2013.

“After most companies announced their results and dividends, traders who were in the rally to trade the news are now taking profits,” said Nabil Rantisi, managing director of brokerage at Abu Dhabi-based Menacorp.

‘Further Upside’

Crude oil for April delivery fell 1.5 percent to $90.68 a barrel in New York on March 1, the lowest settlement since Dec. 24, as manufacturing expanded less than forecast in China and contracted in Europe, bolstering concern fuel demand will decline. Gulf Arab oil exporters, including Qatar and the U.A.E., supply about a fifth of the world’s oil. Abu Dhabi has most of the nation’s oil reserves.

First Gulf, which recommended a cash dividend of 83 fils a share for 2012, dropped the most since Feb. 26 to 13.35 dirhams before closing at 13.45 dirhams. Sorouh, whose full-year net income advanced 32 percent, decreased 1.1 percent to 1.88 dirhams, its weakest close since Feb. 26.

Both companies are poised to post better results this year, with First Gulf set for a 7 percent increase in net income, according to the mean estimate of 11 analysts on Bloomberg. About 122 million shares were traded in Abu Dhabi today, compared with a 12-month daily average of 81 million.

“The market still looks good and there is room for further upside,” Rantisi said.

Egypt Advances

Elsewhere in the Gulf Cooperation Council region, Bahrain’s measure gained 0.7 percent and Oman’s MSM30 Index and Kuwait’s gauge climbed 0.2 percent. The Bloomberg GCC 200 Index of the biggest companies in the GCC dropped 0.2 percent and Saudi Arabia’s Tadawul All Share Index fell 0.4 percent in Riyadh, snapping a two-day gain. Qatar’s stock market was closed for a holiday.

In North Africa, Egypt’s EGX 30 Index rose 0.2 percent, the first advance in six days. Orascom Telecom Media And Technology Holding SAE surged 9.5 percent to 0.69 Egyptian pound, the highest level since July 16. The mobile phone operator’s board recommended 1.35 billion pounds of dividend, or 26 piasters per share, according to Bloomberg calculations.

Israel’s TA-25 Index retreated 0.4 percent at the market close in Tel Aviv. The yield on the government’s benchmark 4.25 percent bonds due March 2023 lost two basis points, or 0.02 percentage point, to 3.96 percent.

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