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Dubai: Gulf stocks declined on speculation share prices have outpaced prospects for earnings growth.
The Dubai Financial Market General Index advanced 0.6 per cent. Abu Dhabi Securities Market Index dropped 0.2 per cent. Abu Dhabi Commercial Bank fell 1.3 per cent to Dh7.09. The UAE's third-biggest bank by assets has added 9.6 per cent this month.
Abu Dhabi National Company for Building Materials rose 1.8 per cent to Dh3.90. The supplier of steel, cement, stones and hardware to construction companies said first-quarter net income increased 13 per cent to Dh16.2 million, according to a statement posted on the website of Abu Dhabi's bourse.
Aldar Properties gained 3.1 per cent to Dh11.80, its highest close since February 21. Abu Dhabi's biggest developer by market value said first-quarter net income more than tripled to Dh1.37 billion as sales soared. Arabtec Holding gained 1.3 per cent to Dh15.65, a record close. The company constructing the world's tallest building in Dubai won a contract to build the 60 billion-ruble ($2.56 billion) headquarters of Gazprom Neft in Russia.
Oman's Muscat Securities Market 30 Index added 0.3 per cent, while the Bahrain All Share Index fell less than 0.1 per cent. Qatar's Doha Securities Market Index lost 0.2 per cent.
Unexpected decline
Zain dropped the most in more than two years even after reporting an increase in first-quarter earnings. Qatar Islamic Bank, the Gulf state's biggest Islamic bank, retreated. Abu Dhabi Commercial Bank fell for a second day.
"Shares have become expensive and some investors are taking profit," Mohammad Salem, a trader at Al Futtaim HC Securities, said from Dubai.
The Kuwait Stock Exchange Index declined 0.8 per cent to 14,600.2. The measure has gained 16 per cent this year.
Shares of companies in the MSCI GCC Countries Index, a measure of more than 140 companies in six Gulf states, trade at an average of 21.6 times estimated earnings, according to Bloomberg data. That compares with a multiple of 13.5 for the MSCI World Index.
Zain tumbled 5.6 per cent to 1,700 fils, its biggest one-day drop since January 2006. Kuwait's largest mobile-phone operator yesterday said first-quarter net income rose three per cent to 73.3 million dinars ($276 million) as it added subscribers in the Middle East and Africa.
"The stock is expensive," Karim Khadr, an analyst at HSBC Holdings in Dubai, said. Khadr has a 'neutral' recommendation on the shares. Zain trades at 15.7 times estimated earnings, according to Bloomberg data. That compares with multiples of 10.6 for Saudi Telecom and 11.7 for Qatar Telecom.
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