Arabian Gulf stocks rose, led by indexes in Dubai and Saudi Arabia, tracking gains across emerging markets as Brent crude prices recovered.
The DFM General Index added 0.5 per cent at 11:32am local time in a second day of gains. Arabtec contributed most to the advance. The Tadawul All Share Index in Riyadh also climbed 0.5 per cent. The Bloomberg GCC 200 Index, a gauge of the largest and most liquid shares in the six-nation GCC, traded 0.3 per cent higher.
Emerging-market stocks rose to the strongest level in a year last week as a rebound in oil prices and optimism that central banks will keep monetary policy accommodative boosted demand for higher-yielding assets. Equities across the GCC typically fluctuate with energy prices because governments in the region rely on income from crude sales to fund public spending.
“Local markets are moving with a high correlation to oil and developing markets globally,” said Talal Touqan, the head of research at Abu Dhabis’ Al Ramz Capital, a brokerage and investment bank. “The valuation gap between developed and developing markets widened during the first half of the year, opening some space for cherry pickers to bargain hunt value stocks.”
In Dubai, companies on the benchmark gauge trade at about 9.9 times expected earnings, compared with a peak of more than 19 times two years ago, according to data compiled by Bloomberg. The DFM’s 50-day moving average crossed its 100-day measure last week, a signal to some analysts that the index may be poised to extend gains.
Abu Dhabi’s ADX General Index rose for a third day, climbing 0.1 per cent. Kuwait’s SE Price Index increased 0.4 per cent and Bahrain’s BB All Share Index added 0.2 per cent. Qatar’s QE Index advanced 0.3 per cent. Oman’s MSM 30 Index gained less than 0.1 per cent.
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