Dubai’s measure hits a five-year closing high after the emirate was chosen to host World Expo 2020, although the benchmark gives back more than half of its intraday gains.
The index climbs 1.6 per cent to finish at 2,946 points, its highest close since October 2008. It hit an intraday high of 3,020 points.
“Some investors were expecting more of a move today, but the announcement was not a big surprise for the majority of regional investors,” says Sebastien Henin, portfolio manager at The National Investor. “People have not sold on the news yet, which is a positive indicator.”
Some analysts expect the rally to be short-lived due to profit-taking, but any selling is unlikely to be extensive as a bullish outlook on most UAE firms has bargain hunters in wait.
Shares in Dubai Investment Co rises 3.5 per cent and thinly traded Mashreq jumps 8.3 per cent. Emaar Properties, Dubai’s bellwether, ends flat.
Abu Dhabi’s measure advances 0.3 per cent to end at 3,850 points as small-cap stocks lead gains.
Saudi Arabia’s petrochemical and banking shares rally due to investor optimism on earnings, while analysts predict the Kingdom’s bourse will outperform regional markets in the near term.
The main index advances 0.5 per cent to 8,348 points to be within 0.8 per cent of Nov. 18’s five-year peak.
“If the same amount of liquidity continues, I would not be surprised to see the index at 8,500 levels before the year-end,” says John Sfakianakis, chief investment strategist at Saudi investment firm MASIC.
“Valuations are on the higher side, but we can argue for this. The banking sector could be an opportunity play for 2014 and investors are looking at this and positioning tactically.”
Earnings growth underpins a bullish outlook for bluechip banks and recovering demand from Asia has lifted investor appetite for petrochemical stocks.
“The Saudi market hasn’t rallied as much as those in the UAE, so it could continue to rally. Upside for Saudi is much larger than for others in the region,” Sfakianakis adds.
Shares in Saudi Basic Industries Corp (SABIC) gain 0.7 per cent, helping lift the petrochemical index, which is up by the same margin.
The banking sector measure also adds 0.7 per cent.
Elsewhere, Egypt’s benchmark index drops 0.6 per cent to 6,165 points, heading for its sixth straight decline.
Investor discontent with the military-led interim government’s slow progress to restoring full civilian rule is weighing on sentiment, traders say.