Saudi index surges to 24-week high
Riyadh, April 29, 2009
Saudi Arabia's index surged to a 24-week high lifted by Saudi Basic Industries Corporation (Sabic), its largest stock, and other Gulf Arab markets rallied as confidence returned following broad declines over the previous 10 days.
The Saudi, Dubai and Abu Dhabi benchmarks all rose more than 2 percent as gains in US markets late Tuesday bolstered confidence locally.
With Asian stocks rallying early Wednesday to snap two days of losses, Gulf investors were willing to take on more risk, driving volumes higher on six of the seven regional indexes. Sabic climbed 5.3 per cent, lifting the Saudi measure.
Sabic is the largest listed Arab stock and the bellwether for the region. Its shock first-quarter loss last week sparked a slump on Gulf markets, but the Saudi index has now risen in five of the past six sessions.
'Saudi Arabia's economy is well cushioned from the global downturn,' said Sunil Dhall, vice-president at Gulf Baader Capital Markets.
UAE stocks have been rocky, with the Dubai and Abu Dhabi indexes falling more than 9 percent from April 19 to Tuesday's close, as grim first-quarter earnings and the prospect of a flu pandemic scared investors in the region's tourist and transport hub.
But these concerns were sidelined on Wednesday as cheaper prices enticed more traders to the market.
'The UAE market's correction was irrational,' said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments.
'Some stocks dropped by 10 to 12 percent in a couple of sessions and this allowed investors to step in at lower prices. 'This is a two-way market, with short term traders exploiting volatility and medium to long-term investors buying on drops to build or reposition their portfolios.'
Dubai's benchmark rose 3.3 percent - its largest one-day advance since March 24 - and Abu Dhabi's index climbed 2.2 percent.
'Investors took the view that selling prompted by swine flu fears was overdone,' said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.
'A raft of negative research today was shrugged off by retail investors who pay little attention to reports that present a predominantly longer term view.'
Volumes on both UAE markets hit a six-session high, but remain markedly below the trading volumes at the peak of this month's rally, which may point to weakness on Thursday, Gulfmena's Arabi said.
'The Gulf markets are all correlated with global equities, but to differing degrees and the UAE bourses overshot on the way down,' he added.-Reuters