By Tom Pfeiffer and Nadia Saleem / Reuters
CAIRO/DUBAI: Egyptian stocks rallied on Wednesday after their biggest losing streak in months created fresh buying opportunities, and most Gulf markets also rose, supported by an upbeat global backdrop.
Cairo’s main index rose 0.8 percent, lifting from Tuesday’s three-week low. The benchmark had lost 7 percent in four sessions, drawing bargain-hunters.
Commercial International Bank led trading, gaining 1.7 percent.
The recent selling was accelerated by reports indicating that Egypt’s political and economic troubles were far from over. Parliament voted on Sunday to begin steps to withdraw confidence from the military-appointed government.
But on Tuesday, the Muslim Brotherhood, which dominates parliament, admitted its demand to sack the army-backed Cabinet was unlikely to be heeded by the ruling generals.
“Locals are rushing in today to buy what they sold earlier, but we believe a further correction is likely,” said Mohamed Radwan at Pharos brokerage, adding that this could take the index down another 10 percent.
“We think there are so many positive hidden events that should kick in in the second and third quarter to take this market to a higher level,” said Radwan.
He cited strong prospects for an IMF loan deal, a resolution to a dispute over Orascom Telecom’s Algerian subsidiary and France Telecom’s plan to acquire shares in Mobinil.
In Saudi Arabia’s, the index gained 0.6 percent to a 42-month high as Samba Financial Group added 2 percent, Bank Aljazira climbed 6.9 percent and Riyad Bank rose 1.5 percent.
Recent oil price gains support petrochemical stocks, with Bellwether Saudi Basic Industries Corp (SABIC) gaining 0.7 percent, National Industrialization (Tasnee) rising 1.1 percent and Saudi International Petrochemical (Sipchem) up 1.3 percent.
Gulf sentiment was lifted as upbeat US economic data lifted risk appetite and pushed world stocks higher.
“The rally today is driven by global sentiment; high oil prices are also helping for the petrochemicals sector,” said Paul Gamble, head of research at Jadwa Investment.
“While some profit-taking may be warranted, we should have upward momentum for the next few weeks. Sentiment is sufficient (to) push the market higher, unless something external happens to derail it.”
In Dubai, bellwether Emaar Properties helped lift the index 0.5 percent.
The developer’s trading volumes hit a 22-month high. It climbed 2 percent, take its 2012 gains to 21 percent.
“Emaar has moved to a more diversified portfolio with hospitality and tourism and reached a more mature level, with improved quality given the recurring revenues,” said Rami Sidani, Schroders Middle East head of investment.
Emaar’s share price surge this year may be waning, however, as investors increasingly looked to book gains.
Contractor Drake and Scull added 1.9 percent after winning a $230 million contract in Algeria.
Abu Dhabi’s Aldar Properties and Sorouh Real Estate extended gains, up 6.6 and 5.8 percent respectively. The two developers are in merger talks and a decision is expected within three months.
The UAE capital’s measure ended up 0.3 percent, edging towards last week’s seven-month high.
