A real estate stock rally extended in Saudi Arabia on Tuesday, helping lift the bourse for a third consecutive session, while foreign investors bought Egyptian bluechips battered by recent political turbulence. The Saudi index rose 0.8 percent. Saturday's sharp drop, that wiped out nearly all the gains of the past four weeks on regional political tension, has brought back fresh buyers.
Real estate stocks outperformed the market, extending a rally driven by upbeat sentiment towards the sector; Makkah Construction and Taiba Holding jump 7.1 and 2.9 percent respectively. The sector's index climbed 2.4 percent, up 38.4 percent year-to-date and outperforming the main index's 10.7 percent gain in 2013.
Current gains in real estate stocks reflect a pricing in of the positive sentiment towards the sector, said Faysal Badran, chief investment officer at NCB Capital. "The dynamics for residential real estate are quite positive given low home ownership and improving disposable incomes." A strong macro story for the kingdom boosts a bullish overall view for the market, he added. Petrochemical and banking shares support the market, with their respective indices and each up 0.9 percent.
In the United Arab Emirates, markets were mixed with Dubai's index easing 0.1 percent to cut 2013 gains to 46.7 percent. The market has traded within a range of 135 points for the last two weeks as investors await fresh catalysts - which may come in the form of second-quarter earnings. Shares in Dubai Financial Market, the Gulf's only listed bourse, rose initially after sources told Reuters that a long-standing proposal for a merger with the Abu Dhabi exchange has been revived.
The stock closed flat as investors booked profits to keep 2013 gains to 92.2 percent. "Investors are pricing in the valuation of Abu Dhabi exchange," said Ali Adou, portfolio manager at The National Investor, adding that the merger would bring more clarity to the market, especially for foreign investors.
Contractor Arabtec rose 2.4 percent, the most actively traded stock. It gained for a second session since Abu Dhabi's Aldar Properties awarded a 4 billion dirhams ($1.1 billion) contract to a joint venture led by the Dubai builder for a mixed-use development project in Kazakhstan. Abu Dhabi's index climbed 0.5 percent, taking gains to 39.1 percent in 2013.
In Egypt, the main benchmark climbed 1.1 percent, its third gain in the last four sessions since it plunged to a near one-year low. Foreign investors bought battered bluechips, while Egyptians extended their selling spree in worries over the country's poor economic outlook worsened by political tension. Trading volumes were thin as most investors stay out of the market as Egypt heads towards June 30, the one-year anniversary in office on President Mohamed Mursi.
Opposition calls for massive protests on the anniversary triggered a sell-off this month. The market has lost 13.8 percent this year, underperforming its Gulf peers. Orascom Construction and Orascom Telecom added 2.1 and 2 percent respectively. Elsewhere, Kuwait's measure was little changed, while Qatar's bourse and Oman's benchmark slip 0.7 and 0.3 percent respectively.
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