17/02/2016 05:29 AST
A return of some risk appetite to global equity markets and a recovery in oil prices helped lift major Middle East exchanges in robust volumes on Tuesday.
Riyadh’s Tadawul All-Share Index rose 0.9 percent to 5,740 points in heavy trade, its second straight day of gains since news that the central bank lifted local banks’ maximum loan-deposit ratio to 90 percent from 85 percent to ease liquidity in the sector.
But the index came off its high of 5,848 points after Saudi Arabia, Russia, Qatar and Venezuela agreed on Tuesday to freeze their oil output at January levels, providing other major producers followed suit. Oil prices rose in anticipation of the announcement and fell back slightly afterwards.
The agreement may support global oil prices but it “is unlikely to significantly alter the economic outlook for the Gulf Cooperation Council,” London-based Capital Economics said in a report.
There are doubts about whether the agreement will hold, with Iran keen to reclaim its share of the global oil market after sanctions were lifted.
In any case, oil prices look unlikely to rise far enough to end pressure on state finances in the Gulf. Capital Economics predicts regional economic growth of just 1 to 2 percent this year and next.
Saudi Basic Industries Corp. (SABIC), the largest petrochemical producer, closed up 1.5 percent. The banking sector, which helped lift the main index 2.4 percent on Monday, added a further 0.3 percent.
Dar Al-Arkan fell 1.1 percent after rating agency Moody’s lowered its credit rating of the real estate developer to B1 with a negative outlook from BA3 with a stable outlook.
Rehan Akbar, a Moody’s assistant vice president, said: “The rating downgrade and negative outlook reflect our view of the interlinkages between the weakening operating and macroeconomic environment that could continue to negatively impact Dar Al-Arkan.”
Dubai’s benchmark rose 2.0 percent to 3,065 points in active trade, cutting its losses in 2016 to 2.7 percent and making it the best-performing bourse among its regional peers.
Volume was concentrated in mid-cap stocks which are usually thinly traded, including Deyaar Development and amusement park developer Dubai Park and Resorts, which gained 5.0 and 3.5 percent respectively.
In Abu Dhabi the index added 0.8 percent, trimming its year-to-date losses to 3.9 percent. Real estate shares were the main support, with Eshraq Properties and Aldar Properties each gaining 1.7 percent.
An Aldar executive said on Monday, after the company reported a 5.6 percent rise in fourth-quarter net attributable profit, that the developer was monitoring the amount of real estate it put up for sale as it tried to manage the impact of a slowdown in the sector.
Qatar’s index edged up 0.2 percent to 9,873 points in this month’s highest volume, but it closed 41 points below its intra-day high. Blue chips buoyed the bourse with Barwa Real Estate BRES.QA and Islamic lender Masraf Al-Rayan each jumping more than 3.0 percent.
Shares in Kuwait Projects Co, which are usually thinly traded, added 1.9 percent after the Gulf state’s largest investment company reported a 10.7 percent rise in fourth-quarter net profit to 15.8 million dinars ($52.9 million).
Kuwait’s main index edged down 0.1 percent.
Egypt’s main benchmark rose 1.6 percent with Orascom Telecom, the most traded stock, adding 1.8 percent after gaining 3.7 percent on Monday.
Arab News
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