Gulf stock indexes benefited from fund inflows into emerging markets on Wednesday, with all advancing for a second day, as central banks in major global markets signalled the prospect of further economic stimulus. The Bank of England is due to have its first post-Brexit policy meeting on Thursday, where analysts are expecting the central bank to cut UK interest rates to calm markets. In Japan, there are also expectations of further economic stimulus this month.
"The lower-for-longer interest rate environment and the positive knock-on effect on emerging markets is clearly seen through the sizeable foreign inflows that regional equities are currently enjoying," said Mohamed El Jamal, managing director of capital markets at Abu Dhabi's Waha Capital. The first slew of second quarter earnings also lifted Gulf investor confidence, bucking expectations of corporate weakness this period because of low oil prices.
"While still early days, second-quarter earning season has kicked off, and we so far had earnings come out from Saudi, Qatar and Oman, most of which came slightly ahead of market expectations and have been supportive," El Jamal said. Saudi Arabia's index rose 1 percent, recording a fourth day of gains since it resumed trading after the Eidul-Fitr holiday. The benchmark's advance was supported by Banque Saudi Fransi, which rose 3.4 percent. The lender, part-owned by Credit Agricole, announced an estimate-beating 3.2 percent jump in quarterly profit and plans for a higher first-half dividend than it paid in the same period last year. Qatar recorded the highest gains, where the index advanced 1.7 percent as positive sentiment carried on from Qatar National Bank's bumper profit growth on Tuesday.
Shares in the largest bank in the Middle East and Africa by assets rose 1.8 percent a day after it posted a 16 percent jump in second-quarter net profit, supported by the inclusion of Turkey's Finansbank in its accounts for the first time. In the United Arab Emirates, Dubai's bourse gained 1.4 percent, as investors built up positions in banking stocks. Dubai Islamic Bank jumped 3.4 percent, while Emirates NBD gained 1.8 percent. Abu Dhabi's index rose 0.7 percent, lifted by telecommunications firm Etisalat whose shares rose 3.7 percent.
Etisalat, which directly and indirectly operates in about 18 countries across the Middle East, Africa and Asia, was among the main beneficiaries of MSCI Index flows, El Jamal said. Oman's index was driven by Bank Muscat, with both climbing 1.1 percent. The marginal increase in quarterly profit, which beat the forecast of analysts, lifted other banking stocks in the sultanate. Egypt's index advanced 1.4 percent. Global Telecom Holding, formerly Orascom Telecom, gained 1.1 percent, its eighth straight sessions of gains to hit a 16-month high.
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