Index upgrade boosts stocks

As UAE shares climb, the country's bourses to be given 'emerging market' status by the FTSE Group, a leading stock index provider.

Shares on the Abu Dhabi Stock Exchange have followed oil prices higher this month.

DUBAI // Stock markets in the UAE were upgraded yesterday to "emerging market" status by the FTSE Group, a leading stock index provider. The news, together with oil continuing to trade above US$70 a barrel, pushed shares higher. Banking and property stocks helped lift Dubai's benchmark index to a three-month high on the last trading session before the long Eid al Fitr break. The Dubai Financial Market index ended 2.1 per cent up to settle at 2127.62, its highest level since June.

The Abu Dhabi Securities Exchange General Index rose 1.6 per cent to close at 3,100.05, led by a 7 per cent gain by Sorouh Real Estate after the firm announced that its chief executive had resigned. Abu Dhabi Commercial Bank and Abu Dhabi Islamic Bank gained 4.3 and 2.2 per cent respectively. Ayman el Saheb, the director of operations at Darahem Financial Brokerage in Dubai, said: "The upgrade to emerging market status means there could potentially be more interest from institutions in this part of the world, which could be translated into renewed trading activity.

"It does not have immediate bearing on the markets but it has helped in lifting investors' sentiment." FTSE, which publishes the FTSE 100 index in London, said the UAE's move to "secondary emerging market" status would be effective from September next year. MSCI, a larger global index provider owned by Morgan Stanley, earlier decided against moving the country into its emerging markets index. Index providers' decisions can significantly affect flows of capital into stock markets. Hundreds of billions of dollars are invested globally in indexes, and the inclusion of markets such as the UAE's in larger ones with more money behind them can cause foreign money to rush inward.

Index providers typically judge markets based on size, transparency, trading volume and openness to foreign investment. The rise yesterday in the UAE's and broader GCC markets came after a prolonged rise for Asian stocks, which sent the MSCI Asia Pacific index to a one-year high. Crude oil also traded as high as $72.73 a barrel. "Oil and encouraging international data have been the main drivers for the sustained rally of the past two weeks and have convinced investors to stay in the market instead of cashing their positions ahead of the trading break," Mr el Saheb said.

Elsewhere in the region, Qatari stocks rose 2.7 per cent, and Oman's MSM30 Index and the Kuwait Stock Exchange Index were each up 0.8 per cent. Bahrain's index climbed 0.6 per cent. Saudi Arabia's Tadawal, the largest stock equities market in the region, is closed until September 26 for the weekend and the Eid al Fitr holidays. Markets across the Middle East will be closed during Eid. Exchanges in Dubai, Abu Dhabi, Doha and Bahrain are to be closed from Sunday until Wednesday, unless Eid starts on Monday, in which case they are to be closed until Thursday. The Nasdaq Dubai and Saudi Tadawul are to be closed until Thursday. Exchanges in Kuwait and Muscat are to be closed until Friday.