(MENAFN - Arab News) JEDDAH: Saudi Arabia's petrochemical stocks continued their advance on Thursday fueled by hopes for strong product demand from key markets. The sector's index added 0.7 percent.
The Tadawul All-Share Index (TASI) added just 0.1 percent dragged down by profit-taking in banks which had earlier jumped on expectations of wider interest margins thanks to the projected increase of US interest rates.
Alinma Bank fell 2.3 percent Al-Rajhi Bank slipped 0.3 percent and Bank Albilad was down 1.2 percent.
The value of traded shares nearly reached SR10 billion.
Qatar's bourse dropped sharply on Thursday as selling by retail investors and frontier market funds more than offset inflows related to the country's increased weighting in MSCI's emerging market index.
The Doha index fell 3.1 percent its biggest daily decline since February 2011. Mobile phone operators were hit hardest: shares in both Ooredoo and Vodafone Qatar VFQS.QA tumbled their daily 10 percent limits.
Islamic lenders Masraf Al-Rayan and Qatar Islamic Bank dropped 7.8 and 4.4 percent respectively. The only gainers were Qatar National Bank and Qatar Insurance Company up 1.8 and 2.0 percent.
Qatar's bourse had risen 3.4 percent to a fresh all-time high since index compiler MSCI said on Aug. 17 that it would increase the weight of several Qatari stocks in its emerging market index at the end of August.
'A lot of traders took positions in the market expecting a strong closing due to the MSCI adjustment' said Sebastien Henin head of asset management at The National Investor in Abu Dhabi.
They were expecting a jump similar to the one seen at the end of May when Qatar was first included in the MSCI benchmark and the bourse jumped 2.0 percent as many passively managed funds moved in on the same day.
But the volume of speculative buying seems to have surpassed actual fresh demand from passive funds which EFG Hermes estimated at only about 100 million.
At the same time funds tracking the MSCI frontier market index to which Qatar and the UAE previously belonged such as US-based exchange-traded fund iShares MSCI Frontier were due to sell part of their UAE and Qatari investments on Thursday according to the index methodology published on MSCI's website.
The Qatar market's traded value rose to 1.68 billion riyals (461 million) on Thursday and foreign institutions were the main buyers. Foreign holdings in Qatar National Bank and Industries Qatar which are having their MSCI weights increased rose by 0.05 and 0.08 percent respectively working out to inflows of 19 million and 25 million.
At the same time foreigners were net sellers of stocks such as Oooredoo and Vodafone Qatar according to bourse data.
Selling by frontier funds also appeared to affect markets in the UAE on Thursday.
Dubai's bourse fell 1.2 percent with most stocks in the red. Builder Arabtec which dominated trading fell 1.7 percent to 4.71 dirhams even though its biggest shareholder and former CEO Hasan Ismaik said on Wednesday the stock was worth over 5 dirhams.
Investors may have been disappointed by the fact that Ismaik who made his comments after Arabtec shares jumped 13 percent to 4.79 dirhams over the previous four trading days did not confirm rumors of an imminent deal to sell part of his stake to Abu Dhabi state fund Aabar Investments.
DP World one of the world's largest port operators sank 3.5 percent even though it reported a 26 percent rise in net profit for the first half of the year to 332 million; analysts had expected 290-300 million.(Full Story)
Abu Dhabi's bourse slid 1.1 percent and three large banks all parts of the MSCI index were the main drags on the index.
Abu Dhabi Commercial Bank Adropped 5.8 percent National Bank of Abu Dhabi fell 2.1 percent and First Gulf Bank was down 1.4 percent.
MSCI's transition plan for frontier funds includes three more adjustments at the end of September October and November.
Some of the money freed up this way will go to Kuwait which remains a frontier market. Kuwait's main index added 0.1 percent on Thursday.