Stock markets around the Gulf rose sharply for a second straight day on Sunday after oil prices bounced and before the release of Saudi Arabia's 2015 budget plan, which is expected to show the kingdom continuing to spend heavily on economic development. The main Saudi index rose 2.5 percent, bringing its gains over the past three days to 16 percent - though it is still 24 percent below its September peak.
-- Saudi index climbs 2.5pc but ends well off high
-- Egypt rises strongly after Fitch upgrades rating
Trading volume hit its highest level since late August, a positive technical sign suggesting the market has established a floor. Bourses in Saudi Arabia and the rest of the Gulf plunged in the past several weeks because of fears that sliding oil prices would force governments to cut back sharply on their spending, hitting corporate profits.
Those fears have eased in the last few days. Brent crude oil bounced back above $60 a barrel late last week, while Saudi Finance Minister Ibrahim Alassaf said last Wednesday that his government would continue spending strongly on development projects and social benefits in its 2015 budget, which is expected to be announced on Monday. Saudi real estate developer Dar Al Arkan, which could benefit from government efforts to resolve the country's housing shortage, was the most heavily traded stock on Sunday, soaring 9.3 percent.
Other big gainers included miner Ma'aden, up 4.0 percent, and petrochemical producer Saudi Kayan, up 9.8 percent. However, the Saudi market came well off its early highs, after rising 5.0 percent at one stage. Many oil traders are not sure that Brent crude has established a firm floor at $60, and any renewed slide towards $50 could push Gulf bourses down again.
Dubai's stock market, the region's most volatile and one of its most heavily leveraged markets, was the biggest loser in the Gulf earlier this month and it was the biggest gainer on Sunday, as trading volume hit its highest level since late August. The Dubai index jumped 9.9 percent, adding to Thursday's 13.0 percent leap, as bluechip Emaar Properties rocketed 13.7 percent and builder Arabtec gained 11.6 percent. The index is still 27 percent below its September peak.
Qatar's market surged 7.6 percent, partly because it was closed for a national holiday on Thursday so it missed out on the start of the Gulf's rally. Vodafone Qatar, the most heavily traded stock, climbed its 10 percent daily limit, as did Barwa Real Estate. Another positive for Qatar was that while FIFA's executive committee unanimously agreed on Friday to publish an "appropriate" version of the investigation into the bidding process for the 2018 and 2022 World Cups, it insisted that Russia and Qatar would still stage the tournaments regardless.
Oman's market performed well, climbing 5.5 percent, after the executive president of the State General Reserve Fund, the country's largest sovereign wealth fund, told Reuters that the SGRF had boosted its buying of shares in the local market because prices had slid to attractive levels. Bahrain underperformed the region, rising just 1.4 percent, after Fitch Ratings cut Bahrain's credit outlook to negative at the weekend, following a similar move by Standard and Poor's.
The Bahraini market had dropped relatively little during the Gulf's earlier downtrend, apparently because of its low liquidity, so it has relatively small room to rebound. The Egyptian stock market, which also began rebounding on Thursday, got a further boost from news that Fitch upgraded Egypt's debt to B, citing government policies to cut debt and stimulate growth. The index climbed 3.5 percent on Sunday.
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