Dubai leads Gulf stocks on stronger global trend

Major Gulf stock markets rose sharply on Thursday, suggesting they had established short-term floors after several weeks of heavy selling, but their long-term outlook remained murky because of unstable oil prices.    

The Saudi Arabian stock index climbed 3.0 per cent to 7,604 points.

It has now rebounded 10 per cent from a 29-month low of 6,921 points hit on Monday, but remains 16 per cent below its level at the end of last month.    

Shares in petrochemical firms, their profit margins closely linked to oil prices, surged as Brent crude rose nearly 4 per cent to almost $45 a barrel.

The petrochemical sector index jumped 5.3 per cent as the biggest company, Saudi Basic Industries Corp, gained 4.8 per cent.    

The Saudi market's slide this month brought down valuations which many funds had considered excessive; at this week's low, the market's forward price-to-earnings ratio was down to about 12 times, reasonable by historical standards.    

Nevertheless, basic reasons for this month's investor panic - the damage which cheap oil is doing to Saudi state finances and the fact that the government has not revealed details of its economic strategy to handle an era of cheap oil - have not disappeared.    

Several market indicators on Thursday suggested investor confidence remained fragile. Stock trading turnover fell even as stock prices rose, while dollar/riyal forwards and Saudi credit default swaps, used to hedge against the risk of a currency devaluation or a sovereign debt default, stayed unusually high.    

Dubai's stock index surged 4.0 per cent to 3,648 points, leaving it up 13 per cent from this month's low, hit on Monday, but 12 per cent below its end-July level.

Interest rates

Property stocks, sensitive to interest rates, were particularly strong after New York Federal Reserve President William Dudley said on Wednesday that the prospect of a September interest rate hike in the United States "seems less compelling" because of unstable global markets.

Emaar Properties gained 4.8 per cent.    

Some volatile stocks favoured by local retail investors soared, with Amlak Finance jumping 9.1 per cent.    

Port operator DP World also fared well, surging 8.7 per cent after it posted interim earnings. It reported a 22 per cent rise in first-half net profit to $405 million, partly because of gains from an acquisition; analysts had predicted a mean $400 million, Thomson Reuters data showed.     

Abu Dhabi's market rose 3.0 per cent as Aldar Properties surged 6.9 per cent.    

Qatar was up 3.1 per cent as Gulf International Services, the most heavily traded stock, added 5.5 per cent.

The drilling rig provider's earnings are closely correlated with the oil industry.    

Outside the Gulf, Egypt's market closed 3.0 per cent higher as equity market sentiment around the world improved. Beaten-down property developer Emaar Misr soared 10.3 per cent.    

Pioneers Holding jumped 10.0 per cent after posting a second-quarter net profit of 321.9 million Egyptian pounds ($41.14 million), up from 96 million a year earlier, on strong revenue growth at its subsidiaries.                 

THURSDAY'S HIGHLIGHTS         

SAUDI ARABIA: The index rose 3.0 per cent to 7,604 points.        

DUBAI: The index surged 4.0 per cent to 3,648 points.

ABU DHABI: The index rose 3.0 per cent to 4,461 points.

QATAR: The index gained 3.1 per cent to 11,295 points.

EGYPT: The index climbed 3.0 per cent to 7,079 points.

KUWAIT: The index rose 1.1 per cent to 5,877 points.

OMAN: The index edged up 0.6 per cent to 5,817 points.

BAHRAIN: The index edged down 0.1 per cent to 1,302 points.

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