Saudi Arabia's banks helped lift the bourse on Monday after two lenders posted estimate-beating earnings, while other regional markets also gained as bargain-hunters bought bluechips. A U-turn on taxes by Egypt's government boosted its market. Riyad Bank, Saudi Arabia's third largest bank by market capitalisation, rose 1.7 percent. The lender posted a 5.5 percent rise in profit due to higher income, beating estimates of analysts polled by Reuters.
"The loan growth is positive and the results show efficiency on the operations side," said Ali Adou, portfolio manager at The National Investor. Saudi Investment Bank jumped 8.4 percent after saying profits in the first three months of 2013 surged 48 percent compared to the year-earlier period.
Saudi bank shares have underperformed the wider market in 2013 after modest loan growth and pressure on net interest margins weighed on earnings in the previous quarter. The sector's index is up 2.9 percent year-to-date. "Overall, if there is limited contraction in net interest margins, you might see the sector as a whole move higher," Adou added.
Petrochemical shares also rose, and the main market index gained 0.7 percent to 7,161 points, up 5.3 percent in 2013. It still faces major technical resistance at 7,200 points, which has capped it since the third quarter of 2012. Elsewhere, Dubai's bourse made its largest one-day gain in three months, rising 2.2 percent. Emaar Properties was the main support, rising 2.1 percent to extend its 2013 gains to 42.4 percent. The property developer will hold its annual general meeting on Tuesday, where shareholders will review 2012 dividends; traders say the proposed 10 percent dividend may be revised higher.
Dubai Islamic Bank rallied 5.7 percent to its highest since November 2010, extending 2013 gains to 19.4 percent. The bank said on Saturday it had repaid 3.8 billion dirhams ($1.03 billion) in financial support received from the United Arab Emirates government during the 2008 global crisis. "The loan repayment sends all the right signals, which has played into the fact that it's been lagging the sector for a long time," said Amer Khan, fund manager at Shuaa Asset Management. DIB has underperformed most UAE banks; heavyweight Emirates NBD is up 43.8 percent year-to-date.
Abu Dhabi banks also rallied ahead of earnings expected in the coming weeks. The emirate's benchmark gained 0.5 percent. In Egypt, the main benchmark advanced 1.6 percent, rising for a third session from a four-month low. Regional investors bought bluechips after the government, in a policy U-turn, cancelled a recently imposed tax on investment gains and stock dividends.
Non-Egyptian Arabs were net buyers of stocks, while Egyptians remained net sellers and foreigners traded little, according to bourse data. After protests by investors, an official said the government would scrap the tax and return to them revenue which had been levied on the take-over by Qatar National Bank of local lender National Societe Generale Bank (NSGB). NSGB shares climbed 2.6 percent.
Commercial International Bank advanced 4.9 percent, Orascom Construction Industries climbed 1.5 percent and Orascom Telecom added 3.6 percent. Traders said OCI shares rise on unconfirmed talk in local media that it has reached a deal with the government to pay 7.1 billion pounds ($1.04 billion) to settle a big tax claim. This could conceivably clear the way for its shares to be bought out by an Amsterdam-listed affiliate, though the government has frowned on the buyout because it could lead to OCI's delisting.