Tadawul gains on MSCI upgrade optimism

Saudi and Qatar markets led Gulf stocks higher yesterday amid optimism index compiler MSCI will upgrade Riyadh to emerging market status and continued fund flows into Qatari blue-chips after MSCI recently raised their weightings.

The Saudi index rose 0.9 per cent, led by financial stocks. Riyad Bank surged 5.4 per cent and Samba Financial Group rose 4 per cent.

The market has become bullish after the appointment of a prominent businessman as labour minister and as it awaits a possible MSCI upgrade to emerging markets status this month. The Saudi index is the best performing market in the Gulf region, up 16 per cent so far this year.

Egyptian stocks fell 2.3 per cent, with analysts attributing the drop to uncertainty over the public response to imminent energy subsidy cuts in light of protests in Jordan.

Orascom Telecom slumped 2.6 per cent and EFG Hermes dropped 1.5 per cent.

Egypt is expected to make deep cuts to fuel and electricity subsidies in the financial year starting in July, part of reforms tied to a three-year $12 billion IMF loan programme the country hopes will draw back investors that fled after its 2011 uprising. Analysts said ongoing demonstrations in Jordan over IMF-backed price increases had raised fears over the public response to similar measures in Egypt.

“People are in a state of panic, which is driving them to sell,” said the head of research at Pharos Securities Brokerage, Radwa El-Swaify.

In Dubai, Emaar Properties extended gains to trade 1.8 per cent higher, while Damac Properties rose 1.7 per cent, lifting the benchmark index by 0.3 per cent.

The Abu Dhabi index climbed 0.9 per cent, helped by a 1.7 per cent rise by Abu Dhabi National Energy Co (Taqa) on the back of strong oil prices. Taqa’s shares have doubled this year.

Meanwhile, healthy gains in tech stocks lifted emerging market equities to a threeweek high yesterday.

MSCI’s emerging market benchmark rose 0.2 per cent in its fourth straight day of gains with emerging tech stocks advancing 0.3 per cent, taking their cue from the Nasdaq closing at record highs.

Following four months in the red, the recent days’ gains brought the index closer to where it started the year.