Arab stocks end year upbeat over surging oil prices, earnings

Dec 31, 2010, 14:16 GMT

Amman - Arab stock markets ended 2010 on an optimistic note, with investors upbeat over rising oil prices and predictions of good annual earnings by listed firms, financial analysts said Friday.

They also cited the easing eurozone debt crisis and signs of sustainable world recovery as additional factors that could lead to a rally at Middle East bourses early in 2011, particularly in the oil- rich Gulf region.

'I believe surging oil prices and expectations of good annual results will be the key factors that will give a momentum to regional markets in the new year,' an Amman-based portfolio manager told German Press Agency dpa.

'I think regional investors will also be encouraged by the bullish performance of global markets, the US and European data indicative of a global upturn as well as by measures taken to come to grips with the European debt problem,' he said.

He noted that oil prices were on Friday trading around 93 dollars a barrel, 'which refers to a tangible increase in Arab surplus petrodollars that are expected to seek investment outlets, including stocks'.

'The fact that global markets closed the year on a two-year high will also have a positive impact on Arab stock markets in the new year,' he said.

Saudi stocks were the key beneficiary in the Middle East in 2010, with the Tadawul All Share Index (TASI) gaining 8.15 per cent on annual basis, thanks to the strong performance of the petrochemical sector, analysts said.

The Saudi benchmark closed the year at 6,620.75 points, representing a 1.6 per cent weekly gain.

The petrochemical sector, which scored annual gains of 20.78 per cent in 2010, helped the market to surmount the pressures of global fluctuations, said Saudi analyst Mohammad Shmaimri who runs a financial consultancy bureau in Riyadh.

However, he detected a weakness in the performance of the Saudi banking sector due to the increasing volume of toxic loans.

Another Saudi analyst Mohammad Anqari believed the Saudi stock exchange was viewing the new year with 'optimism' mainly due to the huge spending the government planned to carry out in fiscal 2011 and the rising crude prices.

'An expansion of between 40 per cent and 50 per cent in the market's liquidity in December indicates that investors enter the new year with a positive outlook,' he said.

The performance of the Amman Stock Exchange has been volatile in 2010, reflecting a prolonged loss of confidence and liquidity crunch, analysts said.

The ASE all-share index closed the year at 2,374 points, representing a 6 per cent decline from a year earlier.

Kuwaiti stocks came under pressure this week from the fallout of a co-confidence vote facing Prime Minister Nasser Mohammad al-Sabah on Tuesday, analysts said.

However, Kuwait's KSE all-share index gained 0.6 per cent this week, closing the year at 6,955 points.

Kuwaiti investors will keep a close eye in the new year on political developments and the multi-billion-dollar deal, whereby the Kuwaiti Zain telecom group planned to sell a 46 per cent stake to the United Arab Emirates telecommunication firm, Etisalat, analysts said.

The UAE stocks, which suffered heavily throughout the year from the Dubai World debt crisis, closed the year in the black, benefitting benefit from news that the real estate group, Nakheel, would honour its Islamic bonds, sukuk, on time, analysts said.

The benchmark of the Dubai stock exchange closed unchanged from a week earlier at 1,631 points, while the Abu Dhabi index gained 0.5 per cent closing at 2,720 points.

Egypt's AGX 30, which measures the performance of the market's 30 most active stocks, closed the week at7,142 points, representing a weekly gain of 2.75 per cent.

Analysts attributed the market's active performance to 'strong demand on behalf of foreign investments funds for blue chip stocks'.

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