Shares rise after US bailout

Gulf stock markets rebounded yesterday, buoyed by the subprime bailout and panicked short-sellers buying stock to cover their positions. The Dubai Financial Market enjoyed the biggest rise, soaring 9.78 per cent to 4,309.9 points, its second-highest one-day gain, while the Abu Dhabi Securities Exchange closed 5.87 per cent to end at 3949.22, with financial stocks leading the surge.

This was the first time that most of the GCC markets were able to react to the US government's Friday announcement of a US$700 billion (Dh2.6 trillion) plan to prop up banks and buy their bad debts. On the same day, the Emirates Securities and Commodities Authority warned short-selling "needed to stop" because it was damaging the markets. This boosted the UAE markets as short-sellers yesterday decided to cover their positions by buying stock, after the UK and US regulators had both banned the practice.

Emaar Properties and Union Properties jumped 13 per cent and 8.7 per cent respectively, with Sorouh Real Estate and Aldar Properties both up 10 per cent. "This is a reaction to the surge in global markets," said Mohamed Alami, head of the international desk in the UAE at Naeem Shares & Bonds. Hashim Omran, the vice president of asset management at EFG Hermes, said markets were now starting to feel "more bullish", but warned it may be just short term as the full effects of the global financial crisis move to the GCC in the form of a local credit squeeze.

Its short-term nature may be demonstrated by the Saudi Tadawul's performance - it was the only GCC market open on Saturday, and so was able to react to the US government's bailout first. It rose 2.5 per cent on Saturday, but by yesterday it had cooled and closed 0.6 per cent down at 7,538.65. Kuwait's main KWSE Index closed up 3.88 per cent to 13.148.4 points, with the country's mobile telecommunications company Zain's value rising 5.81 per cent.

Qatar's main index QSI caught the mood, surging 7.89 per cent to close at 9,230.7 per cent. Bank stocks were much in favour. Oman's main MSI index did not disappoint, jumping more than four per cent in early trading. The Muscat index closed up 4.32 per cent to 8,542.06 points.