Middle East stocks surge on oil; Orascom Telecom lifts Egypt

Firmer oil prices and a revival of global risk appetite helped lift stock markets in Saudi Arabia and Egypt in early trade on Sunday.

Riyadh’s index was up 2.4 per cent as petrochemical firms and banks gained momentum, with Saudi Basic Industries and Samba Financial Group each up more than 2.0 per cent.

Moody’s put the debt ratings of Saudi Arabia and three other Gulf states on review for possible downgrade late on Friday. But many investors saw this as a belated response to old news, and focused instead on oil’s rebound near US$39 a barrel in the past couple of weeks.

Abu Dhabi stocks headed for a bull market, leading most Gulf Arab gauges higher, as rising oil prices added to growing bullish sentiment across global equities.

The ADX General Index climbed 3.1 per cent during morning trade, extending the longest winning streak this year and taking gains since a January 21 low to 22 per cent. Dubai’s DFM General Index, which entered a bull market last month, increased 2.3 per cent and Kuwait’s SE Price Index added 0.7 per cent.

Brent crude rallied a fifth day on Friday, the longest winning streak since November, and stocks climbed after US. employers added more jobs than projected and Nigeria’s petroleum minister said Opec members and Russia may meet to discuss capping output later this month. Governments in the six-nation Gulf Cooperation Council rely on income from crude to fund spending, and stock markets often move in tandem with oil prices.

“Lots of expectation has been built into the potential meeting at the end of the month, and that helped oil kick on,” said Julian Bruce, the head of institutional trading at EFG- Hermes in Dubai, a unit of the biggest publicly traded Arab investment bank. “Relatively encouraging moves across the emerging-market space” and globally are also boosting the rally in the United Arab Emirates’ markets, he said.

Brent crude rose 4.5 per cent to US$38.72 per barrel on Friday, the highest level in three months. Emerging-market equities posted their best week since December 2011 and the Standard & Poor’s 500 Index had a third-straight weekly advance.

In Cairo, the main index advanced 1.9 per cent. Last week investors were hesitant to buy Egyptian shares because of a possible interest rate hike, after bond yields rose, and a weakening currency in the black market, which has increased speculation about a possible devaluation.

These factors have not disappeared. But Orascom Telecom, the most heavily traded stock, climbed 1.8 per cent in the opening minutes after it said its board had approved 924 million Egyptian pounds of financing for its subsidiary Beltone Financial to acquire CI Capital, the investment arm of Egypt’s largest listed lender, Commercial International Bank.


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