Major Middle East bourses climbed more than 2 percent on Tuesday after global oil and equity markets stabilised, encouraging investors to buy stocks with beaten-down valuations. The Saudi index, which had tumbled 20 percent since the end of last year, jumped 4.0 percent to 5,746 points. One of the top performers was Southern Province Cement, a mid-cap materials company, which rocketed 9.8 percent after it reported a 21.6 percent increase in fourth-quarter net profit.
Other mid-caps in various sectors also carried the bourse higher. Bupa Arabia was up 8.7 percent after the insurer reported a 69 percent jump in quarterly profit. Nevertheless, fund managers said that with oil prices still vulnerable to further falls and global bourses shaky, it was too early to call a bottom for Gulf markets.
"The rebound in small and mid-cap stocks, or so-called speculative stocks, does not categorise today's performance as a rally," said Natheer al Mahdi, head of Saudi mutual funds at Riyad Capital. "We are not out of the woods. And we are certainly out of the oasis, when the region was awash with petrodollars," said a Jeddah-based investment adviser. "We are entering an era where companies are dealing with higher expenses, slowing demand and less support from the government."
Most Saudi banks have now reported fourth-quarter earnings, coming in mostly in line with expectations. Alinma Bank jumped 5.6 percent after reporting a 16.3 percent hike in fourth-quarter net profit to 386 million riyals ($103 million); analysts polled by Reuters had forecast on average 367.8 million riyals.
Riyad Bank traded up 1.4 percent after it posted a 19.7 percent fall in fourth-quarter profit, which was in line with expectations. Saudi British Bank rose 0.2 percent; the affiliate of HSBC posted a 3.1 percent drop in fourth-quarter net profit to 939 million riyals. Analysts had forecast 1.04 billion riyals. Petrochemical stocks firmed as Brent oil pulled away from its 12-year trough. Advanced Petrochemical was up 6.7 percent.
"Advanced plants have proven to be among the most efficient petrochemical facilities launched in the kingdom in the last decade," a note by Kuwait's NBK Capital said. The company offers attractive valuations and dividends, it added. In Cairo, the main index traded up 2.6 percent to 6,097 points, trimming this year's losses to 13.0 percent. With global headwinds abating for now, non-Egyptian Arab investors returned to the markets and were net buyers, bourse data showed.
"A break over the 6,300 level will prove that this rebound has legs," said a Cairo-based trader. Amer Group was the top gainer, surging 11.4 percent to 0.39 Egyptian pound after the company's board decided to buy back 125 million shares at a price of 0.43 pound, according to a bourse statement. Orascom Telecom jumped 5.5 percent, its second day of solid gains. The conglomerate, which has holdings across various industries, is expanding into financial services.
In Qatar, the index rocketed 5.5 percent. Masraf Al Rayan surged 9.7 percent and was the best-performing stock. Qatar's second-largest bank by market value reported a 3 percent fall in fourth-quarter net profit to 559 million riyals ($153.5 million), compared to analysts' forecast of 553 million riyals. Qatar Gas Transport, which was added to MSCI's emerging markets index in November, surged 7.9 percent as both foreign and local investors bought back, said one trader. Dubai's stock index rose 3.3 percent as builder Arabtec and Amlak Finance each rose more than 10.0 percent. Abu Dhabi's bourse climbed 2.5 percent as investors bought bluechip stocks. First Gulf Bank and Abu Dhabi Commercial Bank rose 5.3 and 2.4 percent respectively, in their second day of gains.