Arab stocks to receive momentum from rising oil prices

Oct 23, 2009, 12:54 GMT

Amman - Arab stock markets put in a mixed performance this week reflecting investors' worries over third quarter earnings, financial analysts said Friday.

However, they pointed out that Middle East markets stood to gain from rising oil prices, which refer to larger surplus petrodollars that would seek investment outlets at regional bourses.

'I believe Arab bourses will draw benefits from climbing crude prices in terms of replenishing deficient liquidity and boosting developments projects in the region,' an Amman-based portfolio manager told German press agency dpa.

He expected regional markets, particularly in the oil-rich Gulf region, to remain 'psychologically connected' with global markets and to show responses to economic indicators issued in the United States and other major economies.

Saudi stocks kept up their upward trend this week, deriving strength from third quarter results of blue chips, particularly the Saudi Arabian Basic Industries Corp. (SABIC).

SABIC reported a 103 per cent increase in its third quarter profits relative to the second quarter of 2009, mainly due to rising prices of petrochemical products on world markets.

The Tadawul All Share Index (TASI) of the Arab world's largest bourse gained 1 per cent this week, closing at 6,515.81 points.

TASI is currently 35.7 per cent higher than the year's start, according to the weekly report of the Riyadh-based Bakheet Investment Group (BIG).

'TASI closed above the 6,500-point barrier, reflecting optimism on the part of investors' that the market will continue its upward trend, the report said.

The BIG expected investors to 'adjust' their portfolio holdings on the basis of profits announced by listed firms and to build new positions in their search for fresh investment opportunities.

Jordanian shares came under fresh pressures this week due to lack of liquidity, weak foreign demand and the uncertainty about global recovery, analysts said.

The all-share index of the Amman Stock Exchange shed 0.92 per cent this week, closing at 2,624 points, according to the ASE weekly report.

Kuwait's KSE all-share index extended losses this week slipping by 1.3 per cent and closing at 7,608 points due to doubts about the profits declared by commercial banks in the third quarter, an analyst said.

The benchmarks of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi shed 2.5 per cent and 4 per cent respectively due to selling pressures and weak third quarter results particularly by real estate firms.

The indexes of the two markets closed week respectively at 2,244 points and 3,113 points.

Egypt's AGX30 index, measuring performance of the market's 30 most active stocks, closed week almost unchanged at 7,076 points.