Stock News: Gulf Markets Surge As Oil Rebounds; Dubai Up 13%

Stock markets in Saudi Arabia and the United Arab Emirates soared on Thursday after the price of oil rebounded and the Riyadh government eased investors’ fears by saying it would continue spending heavily on economic development.

Saudi Arabia’s bourse rose 8.9 per cent, its biggest daily gain in six years. Almost all traded stocks posted gains and dozens were up 10 percent, the bourse’s daily limit for price moves.

The benchmark had earlier plunged 35 per cent from its September peak due to oil’s sharp decline. Investors across the Gulf dumped stocks fearing that cheap oil would cause governments to cut back spending.

But Saudi Arabian Finance Minister Ibrahim Alassaf said on Wednesday that his government would continue spending strongly on development projects and social benefits in its 2015 budget, expected to be announced on Monday.

UAE, Kuwaiti and Qatari officials have made similar statements in recent days.

Meanwhile, Brent crude for February delivery jumped three per cent and traded above $63 per barrel.

“It’s a combination of stronger oil and U.S. equity markets as well as news from Saudi Arabia yesterday,” said Sebastien Henin, head of asset management at The National Investor in Abu Dhabi, said of Gulf markets’ rally.

“Local equity markets had been hurt unnecessarily in the few previous sessions.”

Some analysts have started rerating stocks after the sell-off made valuations more attractive.

“On the face of it, the market seems to have discounted 2015 pain in stock prices,” Saudi Arabia’s Riyad Capital said in a note on the kingdom’s petrochemicals sector.

While it cut target prices for all companies by 12 to 26 per cent, Riyad Capital upgraded five stocks to a “buy” and maintained the same rating for Saudi Basic Industries.

UAE

Dubai’s equities benchmark ended 13.0 per cent higher, its biggest daily gain since the index was launched in 2004. All traded stocks rose and some surged by their daily 15 per cent limits, including heavyweight developer Emaar Properties .

Trading volume reached its highest since July, a positive technical factor. The rebound followed a steep decline: Dubai’s index had fallen 45 percent from its May peak.

Shares in construction firm Drake and Scull was among top gainers after it said its board would consider buying back up to 10 per cent of the company’s shares at a meeting on Dec. 22.

The announcement, and buy-back activity by Abu Dhabi’s Waha Capital and Abu Dhabi Commercial Bank on Wednesday under existing programmes, were signs that UAE companies think their share prices are now too cheap.

Abu Dhabi’s index surged 6.7 per cent in a broad rally. Aldar Properties, the emirate’s largest listed developer, rose its 15 per cent daily limit, along with Dana Gas and Abu Dhabi Commercial Bank.

Kuwait’s bourse added 1.9 per cent on Thursday and Oman jumped 3.7 per cent. Qatar’s bourse was closed for a national holiday.

In the broader Middle East region, Egypt’s index jumped 3.4 per cent after suffering heavy losses in the previous days as global investors pulled out of emerging markets.