Arab stocks rally on annual earnings, receding eurozone crisis

By Abdul Jalil Mustafa Jan 27, 2012, 13:31 GMT

Amman - Most Arab stock markets scored gains this week, buoyed by annual earnings, dividend distributions and efforts under way to come to grips with the eurozone debt crisis, financial analysts said Friday.

The regional rally was led by Egyptian stocks, which jumped 14.6 per cent on a weekly basis on the improving political climate in the country after the inauguration of the new parliament.

However, analysts warned that geopolitical factors would continue to have an impact on the performance of regional stock markets, particularly the standoff between Iran and Western powers over Tehran's nuclear file and a possible closure of the strategic Hormuz Straits.

'I think the boycott of the Iranian crude as part of the sanctions and the possible internationalisation of the issue is creating tension in the area that could have a negative impact on regional stock markets,' Wajdi Makhamreh, CEO of the Amman-based Noor Investments, told dpa.

He said the fallout of the eurozone sovereign debt ordeal had been absorbed by the Arab bourses and its effect could be 'receding'.

Makhamreh said regional markets, particularly in the Gulf area, stood to gain from the high oil prices and huge surplus petrodollars accruing to the Arab Gulf states.

The bourses of Saudi Arabia, United Arab Emirates and Kuwait rebounded this week mainly in response to annual profits and dividend distributions, analysts said.

The upward movement at the Saudi market was led by the banking, telecommunication and construction sectors.

The Tadawul All Share Index (TASI) of the Arab world's largest stock exchange gained 1.55 per cent on weekly basis, closing at 6,476.86 points.

Analysts expected the Saudi benchmark to continue its upward journey in the coming couple of months towards the 6,700-point level, given the upbeat psychology currently ruling on the market.

'I believe the situation is unprecedented in the Saudi market as far as profits and fundamentals are concerned,' said Abdul-Hamid Omari, member of the Saudi Economic Society.

'I think many investors, who deserted the market after the global financial crisis in 2008, are now mulling comeback to the bourse, given the new optimistic atmosphere,' he added.

Kuwaiti shares advanced this week ahead of the February 2 early elections which investors believed could improve the business climate in the country, analysts said.

Kuwait's KSE all-share index gained 0.9 per on weekly basis, closing at 5,852 points.

UAE share rallied this week led by the banking, construction and real estate sectors.

Dubai's benchmark jumped 5.9 per cent, closing at 1,406 points, while Abu Dhabi's index gained 2.3 per cent with a weekly close of 2,390 points.

Qatar's all-share price index shed 0.3 per cent on weekly basis, closing at 8,435 points, while Bahrain's benchmark closed 0.4 per cent in the red, at 1,138 points.

Jordanian shares were volatile this week due to the liquidity crunch and lack of incentives, Makhamreh said.

The all-share index of the Amman Stock Exchange (ASE) closed the week almost unchanged at 1,938 points.

Egyptian shares surged this week in the light of the peaceful celebration of the first anniversary of the country's uprising and absence of violence, analysts said.

The AGX30 index, which measures the performance of the market's 30 most active stocks, jumped 7.18 per cent on Thursday, the highest daily rise since March 2006. The bullish market was attributed mainly to intensive foreign buying.

Thursday's jump brought to 14.6 per cent the weekly gain of the Egyptian benchmark, analysts said.