Bank stocks lifted Saudi stock benchmark Tadawul All Share Index (TASI) by 0.68 percent to 6,217.23 points on Monday's close. It rose for a third session in four as investors focused on domestic-driven stocks. However, petrochem index fell led by SABIC and Kayan. “Banks and domestic-focused companies are leading the market higher, but it is banks that are having the biggest impact on the index,” said a Riyadh trader who asked not to be identified. “The bank sector has been well bid since Saturday and today it broke out above resistance levels on high volumes.” Al-Rajhi Bank climbed two percent, SABB added 2.3 percent and Riyad Bank gained 2.1 percent. “Combined bank sector earnings rose quarter-on-quarter, so it looks like the worst is behind them, while there is increased competition to lend and borrowing rates for consumers is coming down and we should start to see some good results towards the end of the year,” added the trader. Saudi Basic Industries Corp (SABIC), which holds a 35 percent stake in Saudi Kayan Petrochemical Co, fell two percent after the latter said it is seeking more financing to cover a $2.4 billion rise in building costs for a new plant. Saudi Kayan Petrochemical Co fell 3.6 percent to a two-month low. It said the cost of a new project would increase by about 24 percent in a statement to the Saudi bourse on Sunday. HSBC cuts its price target for Kayan to SR18 from SR23, maintaining a neutral rating. SABB dropped 1.6 percent and Arab National Bank fell 1.4 percent. Youssef Kassantini, an independent financial analyst, says combined bank earnings fell 9 percent in the first half of 2010 compared to the year-earlier period. “If it wasn't for provisions, banks' performance would have been much better, although they have also suffered from a decline in revenues from credit card lending, which has high margins,” he said. Emirates NBD shrugged off an early earnings-driven decline to end higher, helping Dubai's index recover some of the previous day's losses, although volumes slumped. The index climbed 0.2 percent to 1,510 points as volumes fell by almost two-thirds from Sunday, slumping to a two-week low. ENBD ended 0.8 percent higher. The lender's second-quarter profit dropped by more than half, missing analysts' forecasts, although the stock was languishing near multi-month lows, so its results had already been largely priced in, analysts said. “When it comes to UAE banks, and especially those from Dubai, they will have to book huge provisions this quarter and coming quarters, so it's very difficult to estimate earnings, because there's a lot of uncertainty and ambiguity about the size of bad loans,” said Shakeel Sarwar, Sico investment bank head of asset management. The bulk of these provisions will come from quasi-government institutions, Sarwar added. Dubai World is ready to force any rebel lenders back into line if they balk at the terms presented to them under a $14.4 billion debt restructuring plan. Arabtec climbed 1.2 percent after winning a $680 million deal. Abu Dhabi's benchmark edged up 0.03 percent to 2,559 points. Agility boosted Kuwait's index, but most bluechips were flat to lower as gains on global markets failed to excite Middle East investors, with Qatar's benchmark ending lower for a second session in three. In Doha, Barwa Real Estate fell 1 percent and Industries Qatar lost 0.9 percent. Qatar's benchmark fells 0.8 percent, its biggest decline for three weeks. Oman's index slipped 0.01 percent to 6,166 points, its fourth drop in five sessions. Oman Cement ended lower after its second-quarter profit missed forecasts.
