Arab stocks get boost from rising oil prices

Arab stock markets advanced across the board last week, receiving momentum from US President Barack Obama’s plans to spur economy, gains scored by global bourses and rising oil prices, financial analysts said yesterday.

However, they warned that the rally could be “short-lived” due to ambiguity surrounding the outcome of blueprints adopted by the world’s leading economic powers to handle the downturn.

“Obama’s plans to use government spending to jumpstart growth and reshape the chaotic financial system have reflected positively on Middle East markets,” Wajdi Makhamreh, chief operating officer at the Amman-based Sanabel International Holding, said.

“Arab bourses have also received a push from rising oil prices, which help to shore up budgets of Gulf countries and provide additional liquidity for regional markets,” he said.

“However, we believe that the impact of such psychological factors could turn out to be short-lived, given the lack of clear vision as to the chances of global efforts giving a hand to the faltering world economy,” he added.

Makhamreh expected regional stocks to be the target of repeated waves of “speculation and profit-taking” in the coming weeks.

Saudi shares scored fresh gains last week for the second week in a row with sectors of petrochemicals, telecommunications and banking leading the rally.

The Tadawul All-Share Index (TASI) climbed 5.52 percent last week, closing at 4,642.99 points.

TASI is currently 3.3 percent lower than the year’s start, according to the weekly report of the Riyadh-based Bakheet Investment Group (BIG).

“The Saudi market was affected by a series of positive news surrounding the US market, particularly the plan disclosed by the US Treasury to buy $1 trillion of sour assets from banks,” the report said.

The BIG expected the Saudi stock market to witness “narrow fluctuations as investors eye the upcoming corporate results for the first quarter, particularly of petrochemical firms and banks.”

Jordanian shares also rallied last week buoyed by news that Iraqi investors were staging a comeback to the Amman Stock Exchange in the wake of visa and residence facilities extended by the government to Iraqi businessmen, Makhamreh said.

The ASE all-share price index gained 2.69 percent last week, closing at 2,701 points, according to the market’s weekly report. Kuwaiti shares also gained ground last week, boosted by the government’s approval of a $5.2-billion facility to help the country’s banks and investment firms which were facing difficulties as a result of the global financial crisis.

Kuwait’s KSE all-share price index rose by 1 percent last week, closing at 6,753 points.

Kuwaiti Minister of Finance Mustafa Shamali said that the stimulus plan was aimed at restoring “stability of the financial system.”

The all-sharer price index of the United Arab Emirates stock exchanges of Dubai and Abu Dhabi gained 4.6 percent to close week at 2,554 points. Egypt’s AGX-30 index, measuring the performance of the market’s 30 most active stocks, climbed 7.1 percent last week, closing at 4,246 points.