1

1

E-mail Article

Printer Friendly

Share Article

Gulf markets rebound on Fed cut

Markets across much of the Gulf rebounded sharply on Wednesday following the US Federal Reserve's decision to cut interest rates by 75 basis points to 2.25%, a move mirrored by a number of GCC central banks.

Kuwait, Abu Dhabi, Qatar Bahrain and Oman all finished the day in positive territory, but Saudi Arabia and Dubai were unable to shake off concerns about the impact of the global slowdown on the region's economies.

Kuwait led the charge, with news the Gulf state's emir had dissolved parliament helping propel the benchmark index up 1.54%, its largest single-day gain in more than two weeks.
The index ended at an all time high of 14,455.40 points, paced by telecom Zain and National Bank of Kuwait, which both finished up more than 2%.

Kuwait, the only Gulf state that's currency is not pegged to the US dollar, has been the best performing Gulf market in a week marred by heavy losses, notching up six positive closes in seven days.

Emir Sheikh Sabah Al Ahmad Al Sabah on Wednesday dissolved parliament and announced fresh elections in May after his cabinet resigned en masse due to political deadlock with parliament.

Speculators rushed into stocks on rumours Al Sabah will finally push through long-awaited economic reforms.

"There is hope in the market that parliament will get dissolved," Mustafa Behbehani, head of Gulf Consulting said, quoted to newswire Reuters.

"There is a big disappointment with this assembly which has hindered economic reforms... there is hope that things will move in the right direction with a news assembly."

Saudi Arabia, the Gulf’s largest market by capitalisation, continued its poor performance. The kingdom’s main index has been hammered over the last week, posting losses for five of the previous six days.

The main index faired no better on Wednesday, slumping 0.54% to 9,488.85 points, dragged down by Saudi Basic Industries Corporation (Sabic), which fell 0.14%, and Saudi Telecom, which fell 1.13%.

Dubai’s main index has also suffered this week and on finished down 0.7% on Wednesday to end the day on 5,578.9 points.

Losses were led by Emaar Properties and Dubai Islamic Bank (DIB), which slid 0.87% and 1.8% respectively.

Choppy conditions in the markets are largely due to “speculators fear of what is happening in global markets”, according to Ahmed Elrawy, head of trading at Dubai Financial Brokerage.

“The reason for uncertainty is that investors are not looking to inject a lot of money in the markets because of what happened in the US,” Elrawy told ArabianBusiness.com.

Elrawy said he expected conditions to improve gradually as investor confidence slowly returned to the markets.

“This phase will go step by step,” Elrawy said, adding, “we expect investors to start re-injecting money in to the markets within one to two months.”

In Abu Dhabi the main index recouped some of the losses incurred in trading earlier this week. UAE telecom Etisalat advanced 1.71% and First Gulf Bank shot up 3.85%, helping the index up 2.15% to 4,676.47 points.

After falling third time in four days, Qatar clawed back some ground to close up 0.72% at 10,163.13 points, led by banks.

Oman also finished higher for the day, posting its first positive close for the week. Renaissance Services and Oman National Investment skyrocketed 5.5% and 9% respectively, giving the main index a huge jolt.

The index, the best-performing Gulf market so far this year, closed up 0.82% to finish on 10,557.58 points.

Bahrain posted gains after a shaky start to the week. Ahli United Bank continued its strong performance from Tuesday’s trading to gain 3.2%, while Ithmaar also helped the index higher, up 1.5%. The main index advanced 0.41% to close on 2,794.22 points.

Markets across the Gulf will be closed on Thursday to mark the birthday of Prophet Mohammad.

No Comments