A new-found confidence in Dubai's market is expected to lift equities for the second week running as investors turn to the UAE.
Dubai, which was on the brink of a debt default in 2009, is benefiting from an investor flight to safety because of the unrest that has hit other parts of the region.
Signs are pointing to improved liquidity in the country as Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, announced the launch of a new bond. And Dubai Investments said it was in talks with banks about obtaining Dh1.2 billion of loans.
Dubai's economy, the second-biggest of the seven in the UAE, could grow as much as 4 per cent this year, according to Citigroup, compared with 2.2 per cent last year.
"The general mood is positive with a very strong performance expected in the UAE," said Rami Sidani, the head of Middle East and North Africa portfolio management at Schroders, a global asset management company.
"The UAE has been one of the cheapest markets in the world for some time," Mr Sidani said. "We're coming from a very low base."
Stock traders bargaining on strong banking and property results have helped to lift UAE stocks to new highs, and market experts forecast the upward trend will continue as a second round of results filters through this week.
The Dubai Financial Market (DFM) General Index has risen more than 23 per cent since falling to a six-year low at the beginning of March.
One factor in the market's rise is optimism over the possible inclusion of the UAE in the MSCI Emerging Markets Index. A decision is expected in June. The DFM ended last week marginally higher at 1,681.93 points.
The new settlement system is among the last requirements by the index compiler MSCI for it to upgrade the country from its present status of frontier market to emerging market.
UAE "financial markets have already implemented DVP [the delivery versus payment system], which is a strong indicator we're moving in the right direction," Mr Sidani said.
Under DVP, which is expected to take effect in UAE markets this Thursday, share delivery and payment for shares will occur at the same time.
A global upturn in equities also helped momentum in the UAE, as the S&P 500 ended the week 0.5 per cent higher and the Dow Jones Industrial Average advanced 0.4 per cent. The ratings agency Standard & Poor's last week cut its outlook for US debt to negative from stable, news that initially depressed international equities.
The Abu Dhabi Securities Exchange General Index, which ended last week slightly higher at 2,711.15, will also come under scrutiny from traders as some of the capital's biggest banks, including Abu Dhabi Commercial Bank and First Gulf Bank, are due to report this week.
Although first-quarter results from National Bank of Abu Dhabi (NBAD) last week were below expectations because of higher-than-expected provisions, industry experts remained optimistic about the performance of the capital's biggest banks.
"I'm almost certain the banks are going to share some good results, and if those materialise, it'll obviously play out across the [UAE] market," said Mohammed Ali Yasin, the chief investment officer at CAPM Investment in Abu Dhabi.
The emerging-markets veteran Mark Moebius last week said he favoured and was "closely monitoring" Abu Dhabi lenders with a particular eye on NBAD and Union National Bank. Banks represent 30 per cent of his frontier-markets portfolio.
In Cairo, investors are awaiting the telecommunications operator Mobinil's first-quarter results, due to be released on Wednesday, as among the first major indicators of how the Egyptian revolution will affect company earnings.
"I think everybody already knows the first quarter will be very bad, but it may be another reason for further panic when the market reopens," said Mostafa Abdel Aziz, the head of regional trading at Beltone Financial in Cairo.
Mobinil is thought to be among the companies least affected by the upheaval in Egypt, since people continued to rely on telephones during the unrest, analysts say.
However, in February, the company said it had lost 80 million to 100m Egyptian pounds during the protests. Mobile phone companies are expected to have lost important roaming-fee revenue from tourists, since the troubles caused a sharp falloff in visitor numbers.
Egyptian property stocks will also be in the spotlight amid investigations into how the former government distributed land.
Egypt's benchmark index, the EGX 30, will be closed today for Orthodox Easter and tomorrow for Sham el-Nesim, a spring festival that dates back to pharaonic times. The EGX 30 index ended the week 0.2 per cent higher at 4,996.07.
Good first-quarter earnings from companies in Saudi Arabia have spurred gains, and the petrochemical sector is forecast to outperform on rising fuel prices.
Saudi Basic Industries Corporation, the world's biggest petrochemical company by market value, climbed 2.5 per cent to its highest finish since January 17 after it said it expected second-quarter results to be better than first-quarter results because of strong demand for its products.
Last week, it posted a 42 per cent jump in net profit for the first quarter compared with the same period last year.
Oil prices have been a boon to Middle East markets as brent crude ended the week above $123 a barrel. Two thirds of the world's known oil reserves are in the Middle East.
Elsewhere in the region, Muscat's index closed the week 0.2 per cent lower at 6,353.31, Bahrain's was flat at 1,400.83, Qatar's QE Index was 0.2 per cent higher at 8,647.73, and Kuwait's measure advanced 0.1 per cent to 6,442.50. The Tadawul All-Share Index closed 0.24 per cent up at 6,590.64.
