Most Mideast Stocks Rise With Earnings in Spotlight: Inside EM

Most equities markets in the Middle East advanced on Sunday, with investors focusing on first-quarter earnings as reporting season picks up.

Kuwait’s Premier Market Index led gains in the region, climbing more than 1%, while Egypt’s EGX 30 Index added 0.9% and Dubai’s DFM gauge rose 0.4%. Saudi Arabia’s Tadawul All Share Index dropped 0.7%.

Investors are gearing up for a recovery in company earnings across the region as economies rebound from the worst of the coronavirus pandemic. Banks may lead the way. About two-thirds of lenders covered in the Middle East and North Africa are expected to show profit gains, according to CI Capital, with aggregate net income up about 11% from a year earlier and 21% from the previous quarter, analysts Sara Boutros in Cairo and Maryam Saleh wrote in a note.

Qatar National Bank, the Middle East’s biggest listed lender, said after the close of trade Sunday that net income dropped a less-than-forecast 7% in the first quarter. The shares gained 0.2% during the day.

Almarai Co., the Saudi food and beverage producer, slipped 0.4% even after reporting profit for the first three months of the year that met estimates.

Banks in the UAE are likely to outperform on earnings, while Saudi lenders should still stand out in terms of balance-sheet growth, according to Boutros and Saleh.

“We see loan growth in Saudi Arabia continuing to be fueled by mortgage lending, with corporate lending recovery becoming a 2022 story,” they said.

  • MSCI Emerging Markets Index slipped 0.6% last week, the third weekly decline since March 12
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  • In Saudi Arabia, the Tadawul All Share Index trimmed gain this year to 14%
    • MORE: Advanced Petrochemical Resumes Operations of Two Plants
    • READ: Almarai 1Q Profit Meets Estimates
  • Dubai’s DFM General Index rose 0.4%, and Abu Dhabi’s ADX General Index advanced 0.2%
    • Business conditions in Dubai remained flat last month even as the Middle East’s business hub showed signs of recovery from the pandemic
    • MORE: UAE Names Jassem Al Zaabi as Central Bank Vice Chairman
  • Qatar’s QE Index gained 0.2%

    • Qatari stocks are expected to exhibit a “sequential recovery in earnings” on a normalized basis in the first quarter, with a 28% increase from the previous quarter, mostly due to a recovery in non-financial stocks and commodity prices, according to QNB Financial Services
    • Qatar National Cement slid 1.4% following a gain of 2.1% Thursday, when it posted a 29% increase in quarterly net income
  • MORE: Will the Wisdom of Steepening Yield Curves Profit Saudi Banks?

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