Banking shares lead Mideast higher ahead of Fed testimony

Blue-chip banks pushed Middle East stock markets slightly higher on Tuesday, a day ahead of the testimony from Federal Reserve Chair Janet Yellen for clues on when the central bank would tighten US monetary policy.
Yellen’s semi-annual monetary policy testimony before Congress will be on Wednesday and Thursday. San Francisco Federal Reserve President John Williams said on Tuesday in Sydney that it was a reasonable view to expect one more rate hike this year, and his own view was to start adjusting the central bank’s balance sheet in the next few months.
Most Gulf currencies are pegged to the dollar and any monetary policy change in the US is usually mimicked by Saudi Arabia, the UAE and Qatar.
Saudi Arabia’s banks were mixed as some investors turned their focus to upcoming second-quarter results. Heavyweight National Commercial Bank edged up 0.2 percent after rising as much as 1.4 percent earlier in the day.
Analysts at Riyad Capital expect net income for the sector to be flat in the second quarter from the year ago period as provisions may continue to weigh on performance — which they have been for the last several quarters — and because of a dip in credit demand. Nevertheless, they predict operating margins to witness some improvement.
“While SAIBOR (the interbank lending rate) has been flat in the quarter, we believe cost of funds have declined given rising non-interest bearing deposits combined with some growth in advances,” said the note by Riyad Capital.
Mobile phones and home appliances retailer United Electronics Co. (Extra) surged 8.1 percent in heavy trade to its highest close since November 2015 after its chief executive, Mohamed Fahmy, told financial news website, Argaam, on Monday that Extra aims to boost sales through its online portal, and strengthen partnerships with suppliers and brand offerings.
Its shares soared by their 10 percent daily limit on Monday after reporting a near quadrupling in second quarter net income from a year earlier and a 15 percent growth in sales. The Tadawul All Share Index (TASI) added a small 0.1 percent.
In the Abu Dhabi, Abu Dhabi Commercial Bank added 1.6 percent and Union National Bank inched up 0.4 percent, helping take the index 0.2 percent higher. In neighboring Dubai, Dubai Islamic Bank added 1.4 percent and the index rose 0.6 percent.
In Egypt, the index gained 1.5 percent to 13,684 points, reclaiming the all-time high hit on June 8.
Shares of private equity firm Qalaa Holding jumped 5.2 percent in high volumes. On Saturday the company reported a narrowing first quarter net loss of 384 million Egyptian pounds ($21.54 million).
Analysts at Naeem Brokerage expect positive operating trends in the coming quarters, although they “still anticipate losses” mainly because of higher debt servicing costs.
Orascom Telecom, the most traded stock of the day, jumped 5.9 percent, its second straight session of strong gains. On Monday, the company reported a huge leap in its first quarter net profit.
In Doha, the majority of the listed banks were firm with the largest of them, Qatar National Bank adding 1.2 percent. The index rose 0.4 percent.

Source: Arab News