* Saudi index pulls back in final hour
* Insurance sector very volatile
* Qatar, Abu Dhabi underperform
* Egypt's Pioneers jumps after approval to offer GDRs
* Telecom Egypt drops on net loss in Q4
By Celine Aswad
DUBAI, March 13 Speculation over a possible
merger between Dubai-based Shuaa Capital and Bahrain's GFH
Financial spurred heavy turnover in their shares on Monday,
while the banking and insurance sectors dragged the Saudi
Arabian stock index lower.
Shuaa climbed 3.2 percent to a seven-year closing
high of 1.93 dirhams, bringing its gains to 18.4 percent since
Sunday. The Dubai-listed shares of GFH, the market's
most heavily traded stock, surged 7 percent while its less
liquid Bahrain-listed shares jumped 9.7 percent.
On Sunday Shuaa announced it had agreed to acquire
Integrated Capital and Abu-Dhabi based brokerage Integrated
Securities, both controlled by Abu Dhabi Financial Group (ADFG),
which last November bought 48.36 percent of Shuaa.
In December Shuaa bought a 14.01 percent stake in Bahrain's
Khaleeji Commercial Bank, in which GFH owns 47
percent. Meanwhile Integrated Capital has 11.74 percent of GFH,
according to Thomson Reuters' data, and one asset manager said
its stake was as much as 20 percent counting indirect holdings
through investment funds.
The conclusion reached by many investors is that GFH and
Shuaa may be preparing a merger, particularly since both have
said they plan to expand regionally through acquisitions.
Local news provider MEED quoted ADFG chief executive Jassim
Alseddiqi this week as saying Shuaa was in talks with a larger
regional financial institution over a potential merger in a deal
that could be worth billions of dirhams. He gave no details.
Officials at Shuaa, GFH and ADFG did not respond to requests
for comment. Dubai's index rose 0.6 percent on Monday,
with gainers narrowly outnumbering losers 16 to 14.
The Saudi index, which traded briefly in positive
territory, closed 0.7 percent lower. Banks were weak, with all
but two of the 12 listed lenders declining; Samba Financial
Group dropped 3.3 percent.
Insurance shares traded higher for most of the session
before falling steeply. Amana Cooperative Insurance Co
lost 2 percent after surging as much as 8.0 percent earlier in
the day. On Monday it said its accumulated losses had been
reduced below 50 percent of its capital.
Industry experts say there are too many players in the
market and the top five insurance firms control more than
three-quarters of the industry's market share. Small-sized Sanad
Cooperative Insurance said at the end of last week
that it was planning voluntary liquidation.
"In my opinion consolidation in the industry would make more
sense than for companies to dilute or shut down, and so we may
see more mergers and acquisitions happening in the near future,"
said Joseph Bahou, managing director at Jeddah-based Insurance
Medical supplier Al Hammadi Co jumped 3.6 percent
despite saying it plans not to distribute a cash dividend for
2016, intending instead to use the retained earnings to expand
Qatar's index retreated 1.2 percent; Qatar Gas
Transport dropped 4 percent as it went ex-dividend
while the largest listed stock, Qatar National Bank
fell 2.7 percent.
Abu Dhabi's index also closed 1.2 percent down as
heavyweight First Gulf Bank dropped 3.6 percent.
But Eshraq Properties, a small-sized real-estate
developer, added 3.5 percent; Integrated Capital has a 9.47
percent stake in Eshraq.
Egypt's index edged up 0.1 percent, with declining
shares outnumbering advancing ones by 21 to eight.
Financial firm Pioneers Holding jumped 4.1 percent
in unusually heavy trade after the board approved converting up
to one third of its capital into global depository receipts in
London, allowing international investors to trade the shares of
the company in U.S. dollars.
Telecom Egypt fell 3.1 percent after swinging to a
fourth-quarter net loss of 513 million Egyptian pounds ($29
million), compared with a net profit of 868 million pounds in
the prior-year period.
Consolidated revenue for the period rose 28.9 percent and
management said profitability during the period was impacted by
"prudent accounting treatment". The board recommended a cash
dividend of 1 pound per share, higher than last year's 0.675
* The index fell 0.7 percent to 6,788 points.
* The index added 0.6 percent to 3,501 points.
* The index lost 1.2 percent to 4,382 points.
* The index fell 1.2 percent to 10,361 points.
* The index declined 0.5 percent to 6,712 points.
* The index edged up 0.1 percent to 12,929 points.
* The index lost 0.4 percent to 5,716 points.
* The index added 0.4 percent to 1,371 points.
(Editing by Andrew Torchia and Louise Heavens)