Abu Dhabi shares rose to the highest since May as the US Federal Reserve indicated it’s ready to buy bonds to protect the economic recovery. The dollar extended losses, bolstering the appeal of riskier assets and oil.
Emirates Telecommunications Corp, the biggest telecommunications company in the Middle East by market value, climbed for a third day as al Bayan reported the company started talks with banks to finance the purchase of a stake in Mobile Telecommunications Co.
First Gulf Bank, the UAE’s lender owned by Abu Dhabi’s ruling family, jumped 2 percent. The ADX General Index increased 1.2 percent to 2,744.53, the highest since May 23, at the 2 pm close in Abu Dhabi. Saudi stocks declined to the lowest in more than a month.
“Gains in global markets helped by the Fed announcement have pushed up local shares,” said Humam al Shamaa, economic adviser at Abu Dhabi based Al Fajer Securities. “Stocks are cheap in the UAE and investors are taking an interest in riskier assets as the dollar continues to decline.”
US stocks rose yesterday after the Fed published the minutes from its Sept 21 meeting, showing that the central bank was ready “before long” to increase purchases of Treasuries, a tactic known as quantitative easing.
The Fed also discussed boosting inflation expectations as a way to prop up the economy. The Standard & Poor’s 500 Index increased 0.4 percent yesterday, while the Stoxx Europe 600 Index gained 1.3 percent today.
Crude for November delivery jumped 1.3 percent to $82.70 a barrel in electronic trading on the New York Mercantile Exchange on a weaker dollar. The six nations of the Gulf Cooperation Council supply about a fifth of the world’s oil. The Dollar Index, used by IntercontinentalExchange to track the greenback against currencies including the euro, yen and Swiss franc, slid as much as 0.5 percent to 76.972 on Wednesday.
The 66 companies in Abu Dhabi’s benchmark index are valued at 9.9 times estimated earnings after gaining 9.2 percent since the end of June, data compiled by Bloomberg show. That compares with 13.6 times for the MSCI World Index and 13 times for the MSCI Emerging Markets Index.
Saudi Arabia’s Tadawul All Share Index declined 0.7 percent after six of the kingdom’s publicly traded lenders reported lower quarterly profits on higher loan provisions.
Saudi British Bank, the lender 40 percent owned by HSBC Holdings, fell 1.6 percent after it said third quarter profit declined 26 percent. Arab National Bank, Saudi Arabia’s sixth largest publicly traded lender by assets, slumped the most since May after net income dropped 45 percent.
Etisalat advanced 1.4 percent to 11.10 dirhams. The company is considering bank loans, selling bonds or a combination of both, al Bayan reported, citing chief financial officer Salem Al Sharhan. Etisalat won’t need financing from the government of Abu Dhabi and is talking to local and international lenders, the newspaper cited Al Sharhan as saying.
Etisalat offered 1.7 dinars a share for a 46 percent stake in Kuwait’s Zain. Zain shares climbed 2.9 percent to 1,420 fils, the highest close since March 25. The company released earnings after markets closed. First Gulf Bank increased to 15.65 dirhams, the highest since May 30.
The Bloomberg GCC 200 Index rose 0.2 percent. Dubai’s DFM General Index and Qatar’s QE Index climbed 0.9 percent, Kuwait’s gauge added 0.3 percent, Oman’s MSM30 Index gained 0.5 percent and Bahrain’s gauge increased 0.1 percent.
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