Rebounding oil prices and hopes for a cease-fire in Yemen buoyed Gulf stock markets on Thursday, with several Saudi Arabian banks climbing after second-quarter earnings while Egypt stabilised after a plunging in recent weeks. Sentiment throughout the gulf was improved by Brent crude's partial recovery from several days of sharp falls, rising 3 percent to nearly $59 a barrel by the time Saudi Arabia's bourse closed.
The Saudi stock index closed 2.5 percent higher as top petrochemical producer Saudi Basic Industries raced to its 10 percent daily limit in heavy trading and closed at its highest level in nine days. Miner Ma'aden also gained 10 percent.
National Commercial Bank, the kingdom's largest lender, rose 4.6 percent after second-quarter earnings. It posted a 2.6 percent fall in net profit, slightly below analysts' estimates, but also proposed a first-half cash dividend of 0.80 riyal. Al Rajhi Bank gained 4.9 percent after beating estimates, though it halved its dividend. Jarir Marketing, Saudi Arabia's second-largest retailer by market value, slipped by 0.7 percent. It had dropped 2.3 percent on Wednesday after posting a 14.6 percent rise in second-quarter net profit to 154.9 million riyals ($41.3 million). Analysts had on average forecast 158.7 million riyals.
In addition to oil and bank earnings, the market was supported by hopes for a halt to the conflict in Yemen, where a Saudi-led coalition has been bombing Houthi rebels. The United Nations envoy to Yemen said an agreement on a humanitarian cease-fire was expected within 24 hours. "The market has been discounted because of geopolitical risks and the oil price drop," said Mazen al-Sudairi, head of research at al-Istithmar Capital in Riyadh. "If the geopolitical factors improve, the market will definitely improve accordingly."
Elsewhere in the Gulf, Dubai's stock index rose 0.8 percent as construction company Drake & Scull, the most heavily traded stock, jumped 7.2 percent. The stock has been volatile since the company removed ownership restrictions for Gulf citizens on July 2. Abu Dhabi edged 0.3 percent higher as Dana Gas surged 10.9 percent. The company said on Sunday that it had won a favourable court ruling in its dispute with the government of Iraq's Kurdistan over unpaid receivables, though Kurdish authorities denied this.
The Qatar market gained 0.8 percent as petrochemical producer Industries Qatar rose 2.1 percent. Qatar National Bank, the largest lender in the Gulf Arab region, edged 0.2 percent higher after it posted a 10 percent rise in quarterly net profit to 2.91 billion riyals ($800 million). The average forecast from analysts polled by Reuters was for 2.81 billion riyals.
Egypt's index, which had slid to a 15-month low on Wednesday, down 25 percent from February's multi-year peak, crept up by 0.9 percent after six straight days of falls. Trading volume shrank, a negative technical sign, while buying and selling by non-Arab foreign investors was evenly balanced, according to exchange data.
Investment bank EFG Hermes surged 5.9 percent and real estate developer Emaar Misr, which had plunged since making its market debut at 3.80 Egyptian pounds on Sunday, slowed its decline, dropping 2.4 percent to 3.27 pounds. The Egyptian market has been beset by economic and security worries, but valuations that were more than 10 percent above emerging markets as a whole at one stage are now close to them. The index is at about 13.5 times trailing earnings, Thomson Reuters data shows, against around 13.3 for the MSCI emerging market index. However, an EFG Hermes report on Thursday said that Egypt and other Middle Eastern markets could face fresh selling pressure because of economic instability in China, which would cause passive and possibly active funds to shift out of emerging markets.
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