Most Middle East markets rallied on Sunday as investor bet on strong first-quarter results and positive sentiment from Saudi Arabia's additional social spending plan resulted in sustained gains. Saudi Arabia's index hits a six-week closing high, with small cap stocks attracting high volumes and foreign funds. Only three large-cap stocks gained among the top 10.
-- Egypt's EGX30 post largest one-day gain in over a year
"The kingdom's large scale spending measures provided the market with a sentiment boost that put the market back on track and widened risk appetite amongst investors going forward," said Riyadh-based Amro Halwani, Shuaa Capital senior equity trader.
Saudi Arabia has announced extra spending worth about $130 billion this year as it tries to stave off any dissent, especially among its Shi'ite minority. This follows a record budget of $155 billion for 2011.
"With the earnings season only a week away, investor focus will shift to the upcoming Q1 numbers, while political unrest takes a back seat if the situation remains relatively calm."
Egypt's main index saw its highest one-day gain in over a year, rising more than 5 percent. Many stocks neared limit up, in a first session of gain since mass protests demanding President Hosni Mubarak be ousted erupted on January 25.
Major stocks, including index heavyweights Orascom Telecom, Orascom Construction and Commercial International Bank jumped 10 percent.
UAE investors, optimistic about first-quarter earnings, pushed Dubai's index to a five-week closing high, while Abu Dhabi's index rose for a fifth day in six.
"There's been a re-rating in the UAE market, partially driven by strength in Saudi Arabia," said Walid Shihabi, Shuaa Securities chief executive.
"Price points have been pressured significantly...unfairly beaten down by regional trends," he said, adding that further upside is likely.
Analysts forecast sustained momentum in UAE markets ahead of the earnings season. Dubai's benchmark has risen 15.1 percent since hitting a six-year low on March 3.
UAE bank stocks gained after the country's central bank announced growth in bank credit. National Bank of Abu Dhabi and Emirates NBD gained 0.4 and 0.3 percent respectively.
"Bank liquidity is improving and earnings will be supported by lower provisions this year, but there will still be asset deterioration in the corporate segment," said Sofia El Boury, Shuaa Capital assistant vice-president for research, adding that the real estate sector has lagged in recovery.
Qatar's index rose as foreign investors injected more funds in the Gulf.
"We expect our market will have impact from (a rally) in Saudi Arabia," said Hani Girgis, assistant chief dealer at Dlala brokerage. Kuwait's index edged up, helped by Gulf Bank, which added 2 percent. Telecoms operator Zain closed 1.5 percent lower. Oman's index bucked the regional upside trend and closed lower, which analysts attributed to profit-taking after a week of gains.
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