DUBAI: Saudi shares rallied yesterday, boosted by the Kingdom’s decision to cut interest rates but a similar move from the central bank of Kuwait failed to lift shares on the Gulf Arab state’s bourse.
Oman’s index gained more than 1 percent after OPEC oil ministers agreed to remove a record 2 million barrels per day from oil markets in a race to balance supply with the world’s rapidly crumbling demand for fuel.
The Muscat benchmark closed up 1.28 percent at 6,023 points. The index had closed lower for the past five trading sessions.
“The market is optimistic about an OPEC supply cut helping to move prices up... People believe our market is strongly correlated with the oil price,” said Adel Nasr, local brokerage manager at United Securities.
Bank Muscat ended 4.7 percent higher, while National Bank of Oman rose 1.01 percent.
On Tuesday, the Saudi Arabian Monetary Agency (SAMA) slashed interest rates ahead of a US Federal Reserve policy decision on the same day that saw it cut the benchmark rate to zero from 0.25 percent. “There is very positive news out there. The markets are reacting to the global rally in stocks as well as the rate cuts and the oil supply,” said Bishr Bakheet at Bakheet Investment Group.
The Tadawul All-Share Index (TASI) ended 1.28 percent higher at 4,903.81 points.
Zain Saudi Arabia climbed 1.42 percent, a day after its CEO said the firm drew almost a million subscribers in its first month of operation. Saudi Basic Industries Corp. (SABIC) and Al-Rajhi Bank added the most points to the index, gaining 1.72 percent and 1.28 percent respectively.
Kuwait’s central bank followed suit yesterday, reducing its benchmark discount rate, but this failed to lift the index, which fell more than 1 percent.
“People are unsure that the rate cut is going to make a difference ... The market is trading sideways in anticipation of the KIA’s fund,” said Jasem Al-Zeraei, supervisor of brokerage at National Bank of Kuwait.
Last month, Kuwait asked its sovereign wealth fund, the Kuwait Investment Authority (KIA), to set up a multi-billion-dollar state fund after the second largest Arab bourse shed around 30 percent this year in the global financial turmoil.
Also weighing on the market was Global Investment House, whose shares tumbled for a second day after Fitch Ratings downgraded the investment bank’s credit rating, saying Global had failed to meet a debt obligation.
The Kuwait benchmark index ended 1.04 percent lower at 8,806 points.
Kuwait Finance House and Commercial Bank of Kuwait ended 1.12 percent and 1.64 percent lower respectively.
National Bank of Kuwait ended 1.33 percent lower, a day after it said it expected to profit to rise about 10 percent this year but would not meet its 2008 profit target of up to 330 million dinars ($1.2 billion) amid the global financial crisis.
The Doha index ended 1.22 percent down at 6,642 points, having closed higher for the past seven consecutive trading sessions.
“The selling pressure will have come from a bit of profit-taking...but there were strong buying orders coming through toward the end of the session,” said Samer Al-Jaouni, general manager of Middle East Financial Brokerage Co.
Commercial Bank of Qatar and Doha Bank took the most points off the index, losing 3.23 percent and 5.39 percent respectively. Industries Qatar, one of the stocks Jaouni said was being targeted in the last-minute buying orders, ended 1.45 percent higher.
In Abu Dhabi, the benchmark index ended 0.05 percent higher at 2,711 points after three consecutive trading sessions of lower closes.
First Gulf Bank and National Bank of Abu Dhabi added 5.94 percent and 1.45 percent.
The Dubai index, the Gulf Arab’s worst performing bourse having lost more than 67 percent since the beginning of the year, closed up 0.19 percent at 1,929 points.
Emaar Properties and construction firm Arabtec, added the most points to the benchmark, gaining 1.03 percent and 5.81 percent respectively.
