Dubai's bourse made its biggest one-day gain in four months on Thursday as retail investors drove it to a fresh five-year high in bets ahead of earnings, while most of the other markets in the region also gained.
UAE nationals were net buyers on Dubai's market and accounted for more than half of trading value, according to bourse data.
"Institutional money is either already in the market or waiting on the sidelines until there is something clear to bet on - this volatility is basically retail-driven," said Amer Khan, fund manager at Shuaa Asset Management.
Real estate-related shares led trading with some laggards catching up to the market. Builder Arabtec jumped 9.8 per cent. The firm has won new construction projects recently that are being priced in, analysts said.
Other firms are also reaping the benefit from infrastructure spending in the country as its property continues to recover from the 2008 slump. The growth is expected to reflect in fourth-quarter earnings, with announcements a few days away.
"The next catalyst should be earnings but a good strong set is already priced in," Khan said, warning that a further sharp rise in small-caps could lead to a pull-back soon.
Dubai's index climbed 3.6 per cent to 3,819 points, its largest one-day rise since Sept. 15 and highest close since October 2008.
It rose above the 50 per cent retracement of its drop from a January 2008 peak, which lies at 3,807 points. Trading volumes also hit a four-month high.
Neighbouring bourse of Abu Dhabi rose 1.7 per cent to also hit a fresh five-year high.
In Qatar, blue chips helped lift the market - telecom operator Ooredoo jumped 6.3 per cent on heavy trading activity. The firm's earnings are expected in early March; analysts forecast the firm will make between 841.5 million and 547.2 million riyals in profit for the quarter.
Doha's benchmark advanced 1.4 per cent.
In Saudi Arabia, large-cap stocks from the petrochemical and banking sectors helped the market make marginal gains. The index climbed 0.1 per cent, up for a third consecutive session and its highest level since September 2008.
The market, however, lags most regional peers in January performance, following a set of disappointing earnings from blue-chip firms.
"Overall, the market hasn't performed as expected with blue chips causing index to underperform but it has been resilient," said Marwan Shurrab, fund manager and head of trading at Vision Investments.
A positive backdrop from the region and global markets lent to investor confidence and some sectors continue to offer interesting buying opportunities, Shurrab added.
In Egypt, Cairo's benchmark index rose 0.8 per cent to 7,233 points. It is up for a fourth straight day but faces resistance at 7,258 points - the peak of this month.
Elsewhere, Kuwait's measure climbed 0.4 per cent despite blue chip National Bank of Kuwait shares losing 1.1 per cent after its earnings slumped and missed estimates.
DUBAI: The index surged 3.6 per cent to 3,819 points.
ABU DHABI: The index rose 1.7 per cent to 4,655 points.
QATAR: The index climbed 1.4 per cent to 11,338 points.
SAUDI ARABIA: The index gained 0.1 per cent to 8,772 points.
EGYPT: The index rose 0.8 per cent to 7,233 points.
KUWAIT: The index climbed 0.4 per cent to 7,779 points.
OMAN: The index advanced 0.2 per cent to 7,201 points.
BAHRAIN: The index slipped 0.2 per cent to 1,277 points.
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