Egypt's bourse bounced from a nine-day low on Thursday, as foreign investors' buying interest continued to support stocks despite political instability and economic worries. Gulf markets were mixed amid a lack of positive catalysts. Cairo's benchmark index rose 2.2 percent and closed very near its intra-day high, extending its 2012 gains to 49.6 percent.
Shares in Telecom Egypt climbed 3.1 percent, after the Egyptian regulator said it would grant the landline monopoly a licence by mid-2013 to provide mobile services. "Telecom Egypt is a good story, especially after the universal licence by 2013 H1 - Egypt is a rich market," said Reda Gomaa, portfolio manager at Mashreq.
Palm Hills Development and Orascom Telecom climbed 4.7 and 3.0 percent respectively. El Saeed Contracting added 1.7 percent; the trio were the most active stocks on the index. The market's rise was particularly striking because it occurred as the Egyptian pound continued to edge down to fresh eight-year lows, amid talk that authorities might devalue it or bring in fresh capital controls. The possibility of more controls has prompted some depositors to move funds into dollars.
But many regional investors remain interested in the stock market because of its longer-term potential. For these investors, market dips due to political turbulence can seem like buying opportunities. Arab and non-Arab foreigners were net buyers on Thursday, while Egyptians were net sellers, bourse data showed. In the Gulf, Dubai's small-caps helped the bourse extend gains as retail investors dominated, but other regional markets were mixed. There was little institutional activity as many investors were away on holidays.
Deyaar Development and Ajman Bank rose 2.9 and 3.0 percent respectively. Dubai Financial Market, the Gulf's only listed bourse, advanced 3.7 percent. Shares in Shuaa Capital closed 2.1 percent higher at 0.595 dirhams after wild trading which saw them soar as high as 0.67 intra-day. The stock surged 15 percent on Wednesday.
The company declined to comment on the share price move and traders said they knew of no major, fundamental news behind it; instead, they said, short-term traders appeared to be speculating with the stock in response to the volatility. This month the stock dropped as low as 0.49 dirhams, near this year's multi-year low of 0.43 hit in January, and this may have seemed a good base for a rally to some speculators.
Dubai's index climbed 0.4 percent on Thursday and 0.6 percent this week. Abu Dhabi's measure advanced 0.3 percent, edging up 0.2 percent from last Thursday's close; the index failed a test this week of chart resistance at 2,640 points, which was support in mid-October and late November. In Doha, the index slipped 0.2 percent to its lowest close since July 31. The market, down for a fifth straight session, went as low during the day as chart support at 8,308 points, its intra-day low on December 13. Elsewhere in the Gulf, Kuwait's benchmark slipped 0.2 percent, while Oman's index climbed 0.3 percent, halting a three-day dip.
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