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Arab stocks trim worst start in seven years

The Daily Star Lebanon Monday, February 1st 2016 04:12 PM
The 14-day relative strength index of the Saudi gauge was at 24 at the end of last week, the lowest level since December.

DUBAI: Arab 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 Muhammad Shabbir, the Dubai-based head of equities and funds at Rasmala Investment Bank Ltd. “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 percent to $34.74 a barrel on the London-based ICE Futures Europe exchange Friday. The more active April contract increased to $35.99.

The Bloomberg GCC 200 Index, a gauge of 200 of the region’s biggest companies, added 2.9 percent at 2:19 p.m. in Dubai, gaining for a third day. The measure has lost 8.6 percent 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 PJSC, which has the largest weighting, added 4.5 percent to the highest level in three weeks. The developer, which is about 30 percent 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 percent to the highest level since Jan. 6, taking its three-day gain to 11 percent. 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 percent. First Gulf Bank PJSC was the biggest contributor to gains with a 12.4 percent jump, the most since May 2005. A shareholder in the UAE’s third-largest lender canceled a share sale valued at about 1.2 billion dirhams ($327 million), according to people familiar with the matter, after the transaction had already been priced and allocated to investors. The bank is part owned by the government.

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 percent.

Saudi Arabia’s benchmark added 3.6 percent, taking its four-day gain to 8.5 percent. Saudi Basic Industries Corp., one of the world’s biggest petrochemicals companies, rose 4.9 percent, the most since August on a closing basis. National Commercial Bank, the kingdom’s largest lender, jumped 7.5 percent.

“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 today’s 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 percent, the most since March 2011.

The company’s board recommended Thursday a dividend of 3.5 riyals for the second half of 2015.

Oman’s MSM 30 Index added 3.3 percent, the most since Dec. 22. Bahrain’s BB All Share Index rose 1.3 percent, also the most since December, and Qatar’s QE Index advanced 2.3 percent.

Kuwait’s SE Price Index increased 2.1 percent, the biggest jump in more than a year. Kuwait Finance House rose 5.3 percent after the company’s fourth-quarter profit climbed 10 percent 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’s EGX 30 Index rose 0.9 percent, poised to extend its winning streak to five days, the longest in more than a month. That pares the gauge’s decline to 14 percent 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 stabilization of oil prices, but we’re a long way from declaring a definitive end to the down trend.”

Emaar Misr for Development SAE, the country’s second-biggest real estate developer, advanced 1.4 percent. 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’s 1.2 percent increase was the biggest contributor to the EGX 30’s gains. It accounts for about 31 percent of the gauge.

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