By Matt Smith
Stocks boosted by rising oil prices and better-than-expected corporate earnings.
Dubai's index made its largest one-day gain for more than five months on Sunday as better-than-expected earnings, rising oil prices and robust global stocks lifted most Gulf Arab markets.Dubai jumped 5.2 percent to its highest close since Feb. 23 as volumes hit a five-week peak, while Oman's benchmark hit a 2009 closing high and Qatar, Abu Dhabi, Kuwait and Egypt all advanced. Bahrain and Saudi Arabia fell, the latter easing from Saturday's five-week high as banks and telecoms declined.
"First-half results show companies have adapted better than expected to the financial crisis," said Mohammed Yasin, Shuaa Securities chief executive.
"Any analysts that took the first-quarter numbers and multiplied by four are changing their full-year forecasts and if you believe the improving trend will continue then it makes sense to accumulate now," he said.
Property-related stocks were the main drivers of Dubai's rise, with Arabtec climbing 8.2 percent and Emaar Properties jumping 9 percent. The latter has fallen 13 percent since it announced plans to merge with three units of Dubai Holding, which is owned by Dubai's ruler.
"People over-reacted - Emaar will hand over Burj Dubai later this year and its assets justify a much higher stock price," said Yasin. Emaar's multi-billion-dollar Burj Dubai project will include the world's tallest tower.Dubai Islamic Bank rose 6 percent after its second-quarter earnings beat expectations, despite a 40 percent fall in profit.
"Dubai Islamic saw a quarter-on-quarter rise in profit, which shows it has reversed the negative trend and is a positive indicator going forward," said Nadim Jalad, a trader at Naeem Shares and Bonds in Dubai.
Shares in Kuwait Projects Co slid 3.5 percent on Sunday after the US regulator sued two affiliated firms in relation to suspicious stock trades.
The US Securities and Exchange Commission sued Kuwaiti financier Hazem Al-Braikan and two firms - Bahrain-based investment bank United Gulf Bank and Kuwait's KIPCO Asset Management Co (KAMCO) - for engaging in "fraudulent" takeover reports of two US firms, pushing their stock up.
Braikan was found dead on Sunday in an apparent suicide.
Global stocks hit 2009 highs on Friday, while oil has surged to above $68 a barrel, gaining 14.3 percent since slumping to an eight-week low on July 14 as traders bet the worst of global recession may be over.
"Our markets are correlated to two things - global stocks and oil prices," said Jalad. "We have seen very good gains in oil and a breakout in US markets, which have pushed Gulf stocks higher."
Property shares also lifted Abu Dhabi's index, with Aldar Properties and Sorouh Real Estate both surging more than 8 percent.
"Aldar and Sorouh dropped sharply after the market rally came to an end in June and have been flat since, so they were due for a rise," Jalad said.
"Sorouh's earnings were pretty solid and the company says it is in a strong cash position, which is especially important right now, because there are no off-plan sales to provide income for developers. Sorouh and Aldar are totally correlated and so Aldar is moving up as well." (Reuters)For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.