Gulf stocks recover as oil rebounds

Dubai: Gulf equities trimmed their worst January in seven years after oil capped its second weekly advance.
Dubai’s DFM General Index led gains in the region, climbing to the highest in more than three weeks as the number of shares traded was almost double the six-month average. Abu Dhabi’s ADX General Index had the biggest increase in more than a year on a closing basis. Saudi Arabia’s Tadawul All Share Index rose a fourth day, the longest streak since November.
“We were sitting on the sidelines for most of January," said Mohammed Shabbir, the Dubai-based head of equities and funds at Rasmala Investment Bank. “We’re looking to enter the market again this week after the losses we’ve seen this month. February could well shape up as a positive month."
Equities across emerging markets rallied last week as risk appetite strengthened on bets the Federal Reserve will refrain from raising interest rates soon and as oil jumped on speculation an output cut may be on the way. Governments in the six-nation Gulf Cooperation Council, which includes the United Arab Emirates and Saudi Arabia, depend on energy revenue to fund spending.
Brent crude for March settlement, which expired last week, rose 2.5 per cent to $34.74 a barrel on the London-based ICE Futures Europe exchange on Friday. The more-active April contract increased to $35.99.
Worst January
The Bloomberg GCC 200 Index, a gauge of 200 of the region’s biggest companies, added 2.9 percent in Dubai, gaining for a third day. The measure has lost 8.6 per cent this month, poised for the worst start to a year since 2009.
Emirates NBD, Dubai’s biggest lender, led the emirate’s benchmark index as just 211,000 shares were exchanged. The bank’s weight on the gauge was increased this month as part of a regular index review.
Emaar Properties, which has the largest weighting, added 4.5 per cent to the highest level in three weeks. The developer, which is 30 per cent owned by the Dubai government, signed an agreement with Sharjah Investment & Development Authority, known as Shurooq, to form a real estate company, the state-run WAM news agency reported.
The DFM General Index increased 4.9 per cent to the highest level since January 6, taking its three-day gain to 11 per cent. The measure’s 30-day volatility is near the highest in a year following the swings in January.
Abu Dhabi’s ADX General Index advanced 3.7 per cent. First Gulf Bank was the biggest contributor to gains with a 12.4 per cent jump, the most since May 2005. A shareholder in the UAE’s third-largest lender cancelled a share sale valued at Dh1.2 billion ($327 million.
Dana Gas reported a temporary interruption in gas flow in Iraq at the end of last week, the company said in statement to the Abu Dhabi stock market. The shares dropped 2.3 per cent.
Saudi Arabia
Saudi Arabia’s benchmark added 3.6 per cent, taking its four-day gain to 8.5 per cent. Saudi Basic Industries Corpration, one of the world’s biggest petrochemicals companies, rose 4.9 per cent, the most since August on a closing basis. National Commercial Bank, the kingdom’s largest lender, jumped 7.5 per cent.
“The sentiment is improving as oil prices rebound,” said Mohammed Alsuwayed, the Riyadh-based head of capital and money markets at Adeem Capital. “Saudi stocks are regaining investors’ confidence and trust and the performance is a follow-up to last week’s gains. This is likely to continue for the rest of the week.”
Yanbu Cement, a Jeddah-based cement and clinker manufacturer, rose 9.9 per cent, the most since March 2011. The company’s board recommended on Thursday a dividend of 3.5 Saudi riyals for the second half of 2015.
Kuwait’s SE Price Index increased 2.1 per cent, the biggest jump in more than a year. Kuwait Finance House rose 5.3 per cent after the company’s fourth-quarter profit climbed 10 per cent and the board recommended a 17-fil cash dividend for 2015 and one bonus share for every 10 held. The stock’s three-day gain is the biggest since 2009.
Egypt volatility
Egypt’s EGX 30 Index rose 0.9 per cent, poised to extend its winning streak to five days, the longest in more than a month. That pares the gauge’s decline to 14 per cent this month. The measure’s 30-day volatility reading is near the highest since July 2013.
“This rebound indicates that the market may have found its bottom," said Hesham Wafa, a Cairo-based institutional sales trader at Mubasher Trade. “We’re seeing strong interest from retail investors on the back of the advance in global markets. Much of where we go from here depends on the stabilisation of oil prices, but we’re a long way from declaring a definitive end to the down trend."
Emaar Misr for Development, the country’s second- biggest real estate developer, advanced 1.4 per cent. The stock was added by the bourse to the benchmark index for the first time since the company went public in June. Commercial International Bank Egypt SAE’s 1.2 per cent increase was the biggest contributor to the EGX 30’s gains. It accounts for about 31 per cent of the gauge. - Bloomberg News