Firmer oil prices and a revival of global risk appetite helped lift stock markets in the Middle East on Sunday, as heavyweight petrochemical firms and banks boosted Saudi Arabia's bourse in heavy trade.
Moody's Investors Service put the debt ratings of Saudi Arabia, the United Arab Emirates, Kuwait and Qatar on review for possible downgrade late on Friday, and cut Bahrain's rating to junk, citing low oil prices.
But many investors saw this as a belated response to old news, and focused instead on oil's rebound near $39 a barrel in the past couple of weeks.
"This is not really new news," a Jeddah-based analyst said of the Moody's action. "I believe the bottoming of oil prices will outweigh the negative impact of the cut in outlook to negative."
Riyadh's index rose 2.9 percent in the highest volume since Jan. 20. Short-term technicals have turned positive for Saudi Arabia, which triggered a bullish right triangle by breaking its January peak last week; it closed very near its session high on Sunday.
Leading petrochemical producer Saudi Basic Industries gained 3.4 percent and Samba Financial Group added 4.5 percent.
Dubai's index also jumped 2.9 percent as shares in construction firm Arabtec surged 13.0 percent, after adding 8.0 percent on Thursday. They have been swinging wildly in speculative trade since exchange data at the start of last week showed former chief executive Hasan Ismaik had raised his stake in the company to 11.91 percent from 11.81 percent.
Other speculative shares favoured by local traders also attracted volume, with builder Drake & Scull surging 13.1 percent to 0.48 dirhams; it is now up 66 percent from its record low in mid-January. Nine analysts polled by Thomson Reuters on the stock believe it is fairly valued, as their median price target is 0.42 dirhams.
But, in contrast to last week's rebound in Dubai's market, blue chips also posted strong gains. Emaar Properties surged 2.6 percent and Emirates NBD added 2.5 percent.
Abu Dhabi's benchmark gained 3.1 percent with volumes concentrated in mid-cap companies including Eshraq Properties and Dana Gas, the two most heavily traded stocks, which climbed 5.4 and 3.9 percent respectively.
But the banking sector, which was largely dormant last week, was active on Sunday with heavyweights National Bank of Abu Dhabi and First Gulf Bank jumping 2.3 and 4.7 percent.
In Cairo, the main index rose 2.1 percent as local traders were net buyers, while foreign buyers were largely absent, bourse data showed.
Last week investors were hesitant to buy Egyptian shares because of a possible interest rate hike, after bond yields rose, and a weakening currency on the black market, which has increased speculation about a possible devaluation.
These factors have not disappeared. But Orascom Telecom , the most heavily traded stock, jumped 7.0 percent after it said its board had approved 924 million Egyptian pounds ($118 million) of financing for its subsidiary Beltone Financial to acquire CI Capital, the investment arm of Egypt's largest listed lender, Commercial International Bank.
Beltone soared a further 9.9 percent, after more than doubling in price over the past two weeks; CIB added 2.2 percent.