Gulf stocks on an upwards trajectory

Arabian Gulf stock markets mostly rose yesterday, outperforming emerging markets globally, although Saudi Arabia closed lower because of a wave of selling in the final hour.

MSCI’s emerging markets index was down 0.9 per cent. Gulf markets have been weakened by the global downturn but many fund managers think that with Brent oil above $75 per barrel and given the region’s currency pegs, they can ride out instability relatively comfortably.

Vrajesh Bhandari, portfolio manager at Al Mal in Dubai, called last week’s losses in Gulf markets a technical correction.

The Saudi index spent much of the day higher but closed down 0.3 per cent to 7,706 points. Exchange data released late on Sunday showed foreign investors sold a net $67.7 million of Saudi stocks last week. iIt was the third straight week of selling, but outflows remain moderate compared to heavy inflows early this year.

Much of the index’s decline was due to a late drop by top petrochemical producer Saudi Basic Industries (Sabic), which ended 1 per cent lower.

Saudi Arabian Fertilizers gained 6.2 per cent to 78.60 Saudi riyals. It has been rising since late last month, when EFG Hermes upgraded the stock to a “buy” and lifted its price target to 77 riyals from 60.5.

In Dubai, the index rose 0.2 per cent to close at 2,849 points as second-tier real estate developer Deyaar jumped 5.9 per cent to Dh0.447 in its heaviest trade since March. It rose above the 100-day average of Dh0.443 for the first time since March, and is up 15 per cent in the past three trading days.

Abu Dhabi’s stock index rose 1.4 per cent to 4,986 points as First Abu Dhabi Bank surged 3.2 per cent. It fell last week as some investors sold to invest in Abu Dhabi Commercial Bank, Union National Bank and Al Hilal Bank, and following news that the three were in merger talks.

ADCB was up 2.2 per cent and UNB climbed 4.8 per cent yesterday.

In Egypt, the index slipped 0.7 per cent to 15,628 points. The government said annual urban consumer inflation rose to 14.2 per cent in August from 13.5 per cent in July. Capital Economics in London said this meant the central bank would probably leave interest rates unchanged, rather than cut them, at this month’s policy meeting.