Oman and Abu Dhabi shares advanced, helping lead Gulf Arab markets higher, after China signaled it will relax the yuan’s peg to the dollar, boosting confidence in the global economic recovery. Oil rose to a six-week high.
Oman Cables Industry SAOG surged to the highest intraday level since June 3 after the company was raised to “overweight” at Taib Bank. National Bank of Abu Dhabi, the United Arab Emirates’ second-biggest lender, gained 4.3 percent. Oman’s benchmark gauge jumped 2 percent, the most in more than six months, to 6,257.8 as of 1:22 p.m. in Muscat. Abu Dhabi’s ADX General Index climbed 0.9 percent to 2,559.81, the highest level in two weeks. The Bloomberg GCC 200 Index gained for a third day, rising 1.8 percent.
“Positive movements in global markets have a direct impact on local markets,” said Ziad Dabbas, a financial analyst at the National Bank of Abu Dhabi. “The U.A.E. markets are oversold and prices appear attractive.”
The People’s Bank of China said on June 19 it will allow greater “flexibility” in its currency, which has been kept at about 6.83 per dollar since July 2008 to protect exporters. A stronger currency will boost the purchasing power of households in China, the world’s fastest-growing major economy. Emerging-market stocks rose, driving the MSCI Emerging Markets Index to its biggest gain in three weeks.
Crude climbed to the highest in six weeks on speculation that demand may increase in China, the world’s second-largest energy consumer. The six nations of the Gulf Cooperation Council, made up of the U.A.E., Qatar, Saudi Arabia, Kuwait, Oman and Bahrain, supply about a fifth of the world’s oil.
Oil for July delivery rose as much as $1.69, or 2.2 percent, to $78.87 a barrel in electronic trading on the New York Mercantile Exchange. That’s the highest price since May 6. Abu Dhabi’s ADX Energy Index advanced 1.8 percent, the biggest intraday gain in two weeks.
The global economy is “gradually recovering and the upturn in the Chinese economy has become more solid,” the People’s Bank of China said in a statement announcing the action.
The MSCI World Index of developed nations rose 0.8 percent and the Standard & Poor’s 500 Index expiring in September gained 1.5 percent. The MSCI Emerging Markets Index jumped 2.4 percent to 976.733, set for the biggest advance since May 26.
NBAD advanced to 11 dirhams, the highest since May 26. Oman Cables, the biggest cables and wires maker by market value, climbed 4.2 percent to 1.094 rials. The company was assigned a share-price estimate of 1.24 rials at Taib.
Qatar’s QE Index rose 1.1 percent, Bahrain’s gauge gained 0.3 percent and Dubai’s measure climbed for a third day, advancing 0.7 percent. The Kuwait Stock Exchange Index advanced less than 0.1 percent, while Saudi Arabia’s Tadawul All Share Index jumped 0.5 percent to 6,445.09.