Markets track Saudi gains, but volatility remains

Dubai, Kuwait edge away from 6-year lows as Saudi supports; volatility to persist in uncertain political climate
Markets track Saudi gains, but volatility remains
INDEX RISE: Abu Dhabis index rose 0.7% to 2,547 points (Getty Images)
By Reuters
Sun 06 Mar 2011 10:38 AM

Gulf Arab markets rose on Sunday, with the Dubai and Kuwait benchmarks
pulling away from six-year lows to track gains a day earlier on Saudi Arabia's
bourse TASI, the region's largest.

The kingdom's index rose 0.9 percent after surging 7.3 percent on Saturday
to end a 14-session losing run.

"Buying is short-term and based on a market bounce, rather than a full
recovery," said Walid Shihabi, Shuaa Securities chief executive.
"Saudi Arabia is looking for direction and the main concerns remain."

Gulf Arab markets had tumbled in the wake of deadly unrest in Oman and
Bahrain, sparking fears turmoil would spread to Saudi Arabi, with the latter's
Shi'ite minority staging some small protests in the oil-producing eastern
region.

Some buyers have now returned, but volatility remains acute.

"Gulf markets have been taking their cues from Saudi Arabia, with a
very strong correlation," said Haissam Arabi, chief executive and fund
manager at Gulfmena Alternative Investments.

"This is a great opportunity to sell rather than buy -- nothing much
has really changed in terms of the regional political picture. There are
rumours of more protests taking place in the Gulf and March 11 will be a key
day to look out for in Saudi."

More than 17,000 have backed a call on Facebook to hold two demonstrations
in Saudi Arabia this month, the first one slated for March 11, while Saudi
authorities on Saturday warned a ban on marches would be enforced.

Dubai's index DFM made its largest gain in four weeks, rising 2.7 percent.

Air Arabia climbed 2.2 percent and was the most active stock, accounting for
about a fifth of all shares traded. The low cost carrier's shares had slumped
on fears regional turmoil would disrupt its operations and as rising oil prices
likely increased fuel costs for airlines.

"Near term volatility should continue. Last week's sell-off was
over-done," said Shahid Hameed, Global Investment House head of asset
management for the Gulf region.

Kuwait's index KWSE rose for a first session in four.

Zain, subject to a protracted $12bn takeover bid by the UAE's Etisalat,
ended flat, having surged 4.7 percent in the preceding session.

The telecoms firm has proposed a 200 fils per share dividend after it swung
to a fourth-quarter profit.

"It's mostly down to Saudi's rise yesterday, but there's also some
euphoria from Zain announcing its dividend," said a Kuwait trader who
asked not to be identified.

"The market no longer thinks the Zain-Etisalat deal will go through,
but a nice dividend yield is good compensation."

Zain shares are widely used as collateral by investors to borrow from banks
and lenders' shares were among the biggest gainers. Kuwait Finance House climbed
5.7 percent and Gulf Bank rose 3.2 percent.

National Bank of Kuwait fell 1.5 percent after Moody's put Kuwait's largest
listed lender on review for possible downgrade.

Oman's Renaissance Services climbed 4.4 percent after saying it aimed to
raise about $500m in a London listing of a Dubai-based unit.

Sunday's highlights:

Saudi Arabia

* The index TASI rose 0.9 percent to 5,763 points.

Dubai

* The measure DFMGI rose 2.7 percent to 1,389 points.

Abu Dhabi

* The benchmark ADI gained 1.1 percent to 2,558 points.

Oman

* The index MSI climbed 0.8 percent to 6,404 points.

Kuwait

* The benchmark KWSE rose 0.7 percent to 6,190 points

Bahrain

* The measure BAX climbed 1.3 percent to 1,396 points.

 

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