Dubai leads regionwide gains after Fed keeps stimulus steady

DUBAI: Dubai’s bourse led a regional uptrend after the surprise decision by US Federal Reserve to maintain its bond-buying program.
Compared to emerging markets in Asia, the impact on markets in the Gulf was modest; since it does not rely on foreign capital inflows, the region had been much less worried than Asia about any tightening of US monetary policy.
But the Fed’s decision was still positive for the Gulf by supporting demand for its oil exports, and by implying global interest rates would remain low, benefitting the property sector.
“Regionally, our foreign exposure is increasing and they’re putting more money here,” said Fouad Darwish, head of brokerage at Kuwait’s Global Investment House. “Investors that were factoring in a Fed tapering were on the sidelines but are now back in.”
Dubai’s bourse rose 2.2 percent to 2,666 points, its highest close since Aug. 26 and 3.0 percent away from this year’s peak, hit in August. Deyaar Properties surged 6.3 percent to a multi-year high.
Mashreq Bank, Dubai’s third-largest bank by market value, jumped its 15 percent daily limit after the lender said it was boosting the ceiling on foreign ownership in the stock to 20 percent. One analyst suggested the bank might be doing this in preparation to raise capital. Turnover in the illiquid stock remained very low.
Abu Dhabi’s measure gained 1.2 percent, halting a three-session decline. Kuwait’s index rose 0.5 percent to 7,848 points, a three-week high; the market peaked at 8,437 points in late May.
“There is optimism that there will no escalation in the Syrian conflict and third-quarter earnings will be better than second-quarter. Many stocks are undervalued and reaching the 8,000 level for the index is easy,” Darwish said about Kuwait.
In Egypt, shares in Egypt Kuwait Holding surged 7.7 percent, trimming its 2013 losses to 35.2 percent. Cairo’s benchmark index added 0.3 percent, extending its 2013 gains to 1.2 percent.
After the Fed decision, “the US dollar is falling in the parallel market and investors stopped speculating the currency will go up and are instead chasing higher returns in lagging stocks,” said Mohamed Radwan, director of international sales at Pharos Securities in Cairo.
The political backdrop in Egypt remains murky. Security forces and militants fought gun battles on Thursday during a government operation to wrest back control of a town near Cairo dominated by Islamist supporters of ousted President Muhammad Mursi. Explosives experts defused two primitive bombs on the Cairo metro line.
This was at least partly offset, however, by news that Egypt would shorten its curfew by two hours as of Saturday — a sign of increasing confidence within the government.
Egyptian central bank governor Hisham Ramez said Egypt had returned to Qatar $2 billion that the Gulf state had deposited with the central bank — an apparent indication that Cairo now felt it had enough financial support from Saudi Arabia, the UAE and Kuwait, and no longer needed to rely on Qatar.