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DUBAI: Egypt’s bourse hit a fresh 10-week high yesterday after a $2.5bn financial lifeline from Qatar spurred Cairo investors to buy equities, as most Gulf markets continued their rise on the back of strong fourth-quarter earnings expectations.
Qatar lent the country another $2bn and gave it another $500m outright to help control a currency crisis.
Political strife has set off a rush to convert Egyptian pounds to dollars over the past several weeks, sending the currency to a record low against the US dollar and draining foreign reserves to a critical level.
“There is some momentum from the Qatari aid — people are betting on valuations and results — but, generally, it’s not a good environment (for investing in equities),” said a trader at a regional investment bank. “Foreign reserves are at dangerous levels, the IMF loan deal is still not closed and there’s no clarity on the direction of the new government.”
A senior International Monetary Fund official met Egypt’s government on Monday to discuss a vital, long-delayed $4.8bn loan. Investors have been betting on the loan for the past few months and delays are making some nervous.
Cairo’s gainers outnumbered losers 15 to 12, while six stocks ended flat. Commercial International Bank rose 3.5 percent and Telecom Egypt gained 1.8 percent.
The market is trading near resistance levels and the rally is likely to falter, the trader added.
Cairo’s benchmark index climbed 1.1 percent to 5,867 points, its highest finish since October 29. It peaked at 5,969 points on September 26. That was its highest level since January 2011, when a political crisis started that ultimately led to the exit of former President Hosni Mubarak.
Elsewhere, Saudi Arabia’s index rose 1 percent to its highest close since September 17 as banks supported.
Heavyweight Al Rajhi Bank and Samba Financial Group gained 3.3 and 3.4 percent respectively. Alinma Bank climbed 3.4 percent.
Investor sentiment for the financial sector was buoyed by Banque Saudi Fransi reporting a 22.2 percent jump in quarterly net profit on Monday. The lender’s shares rose 0.7 percent yesterday.
In the UAE, Dubai’s bourse climbed to a fresh 10-month high and daily traded volumes also hit their highest in the same time period as an economic recovery boosts investor sentiment.
The emirate’s index rose 1 percent to its highest finish since March 5, taking 2013 gains to 7.6 percent. Volumes — at 505 million — were the highest in one day since March 6. “Given the speed of the rally, you may see some profit-taking but it is justified — we’ve seen credit rally and real estate recover,” said Anastasios Dalgiannakis, institutional trading manager at Mubasher. “The only asset class lagging was equities and people are finally putting their money there.”
Dubai’s property market is gradually recovering as demand returns, following three years of slump. House prices in Dubai had plunged by over 50 percent from a 2008 peak.
Shares in National Central Cooling surged 14.7 percent to a nine-month high, accounting for a more than a fifth of all shares traded on the market.
Traders say the move seems exaggerated and lacks reasoning.
Abu Dhabi’s benchmark slipped 0.2 percent, easing from an 18-month high.
Investors booked gains in Aldar Properties and Sorouh Real Estate, which slipped 3.1 and 3.8 percent respectively, after the two developers rallied on Tuesday after sources said they’d reached an initial merger agreement.
Aldar said in a bourse statement yesterday it is in advanced merger talks with Sorouh.
Elsewhere, Qatar’s index gained 0.4 percent to its highest close since April 30.
Gainers outnumbered losers 13 to six on the 20-stock index. Qatar Electricity and Water gained 1.5 percent and Qatar Telecom rose 1.4 percent.
“Qatar will continue to focus on fourth-quarter results and any change in the dividend announcements — if there is any positive surprise — I would expect it to make up the lag it had,” said Marwan Shurrab, vice-president and chief trader at Gulfmena Investments.
Doha’s market fell 4.8 percent in 2012, following three years of gains.
It was among the worst performing markets in the region as investors were disappointed with dividends and with the slow progress over infrastructure development projects as the country prepares to host the FIFA World Cup 2022.