DUBAI/CAIRO: Lack of buying interest weighed on Gulf markets on Thursday, while investors in Egypt digested news of a planned narrower-than-expected budget deficit and its possible impact on the country’s economy.
Abu Dhabi’s Aldar Properties dragged down the emirate’s index after Moody’s cut its credit rating by two notches. The developer fell 3.7 percent.
Abu Dhabi’s benchmark retreated 0.6 percent, down for a third session since Sunday’s near eight-month high. Volumes slumped to a two-week low, showing a lack of investor interest after index compiler MSCI delayed its verdict on upgrading UAE and Qatar markets.
Dubai’s index slipped 0.8 percent, extending declines for a second session since the MSCI announcement.
Most stocks were down. Bellwether Emaar Properties slipped 1.3 percent, Dubai Financial Market fell 3.3 percent and Arabtec slid 3.1 percent.
In Kuwait’s, the benchmark eased 0.2 percent, ending down in four of six sessions in thin trading. Gulf Finance House weighed, falling 2.9 percent.
"It’s the usual summer doldrums, most people are away on holiday — hat’s affecting low turnover in the market," said Shahid Hameed, Global Investment House head of asset management for the Gulf region. "There is very limited activity and no news flow as such to excite anybody."
Zain ended flat despite Goldman Sachs saying in a report the company would continue to lose market share in Kuwait and Iraq, as management focuses more on corporate restructuring than on addressing operating problems. It maintained a sell rating on the telecom operator.
"The stock has already taken a beating and the report is not news to the market," Hameed added.
In Egypt, Finance Minister Samir Radwan on Wednesday reined in his plans for state expenditure in 2011/12 and lowered the official budget deficit estimate to 8.6 percent from 11 percent.
Some analysts said the decision could be negative for the market because state-led stimulus to the recession-hit economy might be less than hoped.
Others disagreed. "It gives an indication that the economy has moved up the scale as a priority for the ruling army council," said Osama Mourad, CEO of Arab Finance Brokerage.
"It also ensures that Egypt does not approach a level of budget deficit that could put the country at any risk."
The index, which on Monday reached its highest level since an uprising against President Hosni Mubarak began in January, ended up 0.1 percent.
Talaat Moustafa rose 0.5 percent, and Commercial International Bank slipped 0.6 percent.
Pioneers jumped 6.5 percent and Egyptian Resorts gained 6.2 percent. Citadel Capital fell 1.8 percent and El Sewedy Electric 1.6 percent.
"The market is in a hesitant mood this week because of the absence of local news coupled with the negative news coming from Greece … but I have a very positive outlook," said Mourad.
Markets in Qatar, Oman and Bahrain ended largely flat.
