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MIDEAST STOCKS-Saudi rises above 8,000; Egypt extends rally
August 5, 2013 / 1:42 PM / 4 years ago

MIDEAST STOCKS-Saudi rises above 8,000; Egypt extends rally

* Saudis buy in anticipation of post-Eid rally

* Broke major technical resistance this week

* Egypt now posting gain for year

* But many foreigners still reluctant to buy

* Retail investors boost Dubai to 56-month high

By Nadia Saleem

DUBAI, Aug 5 (Reuters) - Saudi Arabia’s main stock index rose above the 8,000-point level on Monday for the first time in nearly five years, while Egypt hit a fresh five-month high on increasing hopes for a peaceful resolution to its political crisis.

The Saudi index advanced 1.3 percent to 8,072 points, its highest finish since September 2008; it has gained in five of the last six trading sessions.

The kingdom’s bourse will close from Tuesday for Eid holidays and resume trading on Aug. 13; investors’ willingness to hold stocks over the holidays is a bullish signal.

“The recent buying is positioning ahead of a post-Eid rally,” said Amer Khan, fund manager at Shuaa Asset Management.

“From a fundamental perspective, quarterly earnings were either in line or better than expectations, underlining the strength in the Saudi economy.”

The country’s economic fundamentals justify the increase in share prices although some sectors, such as those driven by local consumption, are now trading at a premium to regional valuations, he added.

The Saudi index’s break this week above major resistance at 7,944 points, the April 2012 peak, was long-term bullish and leaves no major chart barrier before 8,782 points, the 61.8 percent retracement of the fall from January 2008.

The petrochemical and banking sectors, which together account for around 60 percent of total market value, rose 1.3 and 1.8 percent on Monday.

EGYPT

Meanwhile, Cairo’s benchmark climbed 1.5 percent to its highest close since Feb. 21; the market has fully recouped losses suffered during the political turmoil early this year and is up 2.8 percent year-to-date.

Several thousand Islamist supporters of deposed president Mohamed Mursi marched through downtown Cairo on Monday calling for his reinstatement and denouncing the army general who led his overthrow.

However, violence on the streets has lessened and analysts believe Mursi supporters and the army-backed government are showing signs of reconciliation. International envoys have stepped up talks with leaders of the two sides to try to find a political solution.

Egyptians and Arabs were net buyers of stocks on Monday while foreign investors were net sellers, bourse data showed.

“We’re looking for political stability before we add to positions in Egypt. There won’t be clarity on companies’ earnings or the currency until there is a clear macroeconomic outlook,” Shuaa’s Khan said.

But the Egyptian index also staged an important technical breakout this week, smashing major resistance around the 5,450-point area, which capped it in May and July. The next major resistance is at the January peak of 5,884 points.

DUBAI

In Dubai, the measure rose 1.2 percent to hit a fresh 56-month high as upbeat second-quarter earnings boosted retail investor sentiment.

Many analysts say that with the index now up 63 percent year-to-date, it is in for a significant pull-back, but there are so far no clear technical signs of that and the charts remain long-term bullish.

“Most of the blue-chip companies have reported second-quarter earnings and although they were solid, I think they are priced in,” said Mohab Maher, senior manager of the institutional desk at MENA Corp. The market is heading towards a correction in the coming two weeks, he adds.

The market has been dominated by retail activity as investors look for short-term gains. Dubai Investments Co and Dubai Financial Market climbed 1.6 and 3.5 percent respectively, the two most active stocks.

MONDAY‘S HIGHLIGHTS

SAUDI ARABIA

* The index rose 1.3 percent to 8,072 points.

EGYPT

* The index climbed 1.5 percent to 5,615 points.

DUBAI

* The index advanced 1.2 percent to 2,655 points.

ABU DHABI

* The index eased 0.04 percent to 3,929 points.

QATAR

* The index gained 0.5 percent to 9,808 points.

OMAN

* The index climbed 0.5 percent to 6,711 points.

BAHRAIN

* The index advanced 0.6 percent to 1,199 points.

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