Investors snapped up blue-chips, most notably in the banking, property, energy and petrochemical sectors, which are rebounding on hopes the global economy is showing signs of recovery, following sharp stock declines in the past 12 months.
“A lot of fund managers are rushing in to buy the pivotal stocks, which are seeing some very big movements,” said Sunil Dhall, vice-president at Gulf Baader Capital Markets in Muscat.
“There is positive news on all fronts and people are jumping in to make a quick buck.”
These gains could be short-lived, analysts warn, with the newfound bullish sentiment based on little concrete improvement in the global economy.
Gulf stocks took their lead from global markets, which surged on Friday following the release of stress test results for US banks, with some lenders announcing plans to sell debt or equity to raise capital. US employment figures were have shown the pace of new job losses was waning.
Oil is also holding steady at around $ 58 a barrel, just below a six-month high, attracting inflows to Gulf stocks from both local and foreign funds. “What is clear in markets currently is that ‘less bad is the new good’,” said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.
“Jobs data from the US, while still weak, was better than estimates and bank stress test results were also not as bad as many feared.”
Dhall was similarly cautious, saying regional and global economies remained distressed.
“Policymakers, analysts and most bankers across the globe who utterly failed to see the biggest economic crisis of this generation are now asking us to believe that they now fully get it and that the green shoots of recovery are just around the corner,” added Dhall. Investors were less cautious in Qatar, where the index surged 5.1 percent — its largest one-day gain in five weeks. Oman’s measure rose 2.7 percent and Dubai was up two percent.
Industries Qatar jumped 7.3 percent, tracking regional rivals Saudi Basic Industries Corp (SABIC) and Saudi International Petrochemical Co (Sipchem) which made near-double digit gains on Saturday after they announced a cooperation agreement.
Both made further gains on Sunday, helping the Saudi index log a modest gain to hit a fresh 26-week high. Oman’s banks advanced, with National Bank of Oman jumping 7.9 percent. In Abu Dhabi, First Gulf Bank and Union National Bank both rose about two percent, although the pair’s late gains were partly obscured by the use of closing average prices.
Dubai’s property-related stocks were resurgent, with bellwether Emaar Properties climbing 4.4 percent and Arabtec — another market barometer — soaring eight percent after announcing it was part of a joint venture awarded a Dh1.6bn ($ 435.6m) contract in Abu Dhabi.
