US Fed chief comments lift regional shares

Middle East stock markets extended gains yesterday, helped by a rise in oil prices and by dovish comments from the US Federal Reserve Chair Janet Yellen that pointed to a more gradual tightening of monetary policy.

US treasury yields eased following Ms Yellen’s statement that interest rates could not rise “all that much further”, a positive factor for emerging markets globally.

Inflows from emerging market investors in the Arabian Gulf provided support to the Qatari and the UAE stock markets in particular, as they are both linked to the MSCI Emerging Markets Equity Index.

EM inflows were particularly strong in Qatar, with the stock exchange up by over 2 per cent on the day. The Qatari index was at its highest since some of its Arab neighbours severed diplomatic and transport ties with the Arabian Gulf state in early June.

The Saudi market was slightly up yesterday, with the Riyadh index 0.18 per cent higher day-on-day.

Some companies’ results began to come out over the past few days, and they have generally been above expectations. This has given some strength to the Saudi stock market, in particular in the consumer and the financial sector.

Banque Saudi Fransi and Al Rajhi Banking & Investment have both increased their dividends’ payouts – an unexpected move that lifted the whole banking sector in Saudi Arabia. Al Rahji was up by 1.2 per cent yesterday, while Bank AlJazira registered the highest gains, climbing 2.7 per cent day-on-day.

On the consumer side, Jarir Marketing announced yesterday a net second-quarter profit of 157.8 million riyals, confirming expectations of a strong performance by the consumer sector after the Saudi government’s decision to reinstate the public sector workers’ allowance that had been cut last October because of pressures on the state’s coffers.

In the UAE, the Abu Dhabi stock exchange rose by 2.46 per cent, while Dubai gained 1.23 per cent yesterday.

First Abu Dhabi Bank was 3.94 per cent higher on expectations of positive financial results. Union National Bank rose by 3.68 per cent on the back of an increase in its second-quarter results, as announced by the company earlier this week.