Abu Dhabi’s Shares Lead Gulf Market Rally After Oil Price Jump

Shares in Abu Dhabi rose to the highest level in three weeks, leading gains in Gulf Arab markets, after crude oil surged the most in more than two years. Dubai’s stocks also advanced.

The ADX General Index added 1.7 percent to close at 4,555.27, the strongest since Dec. 28. First Gulf Bank PJSC led the increase with a 2.4 percent jump. Dubai’s DFM General Index rose 1.5 percent to the highest level in almost three weeks and Qatar’s QE Index climbed 0.5 percent.

Brent, the benchmark for more than half the world’s oil, surged 5.2 percent, the most since June 2012, to $50.17 a barrel on Jan. 16. The International Energy Agency lowered its forecast for supply from non-OPEC oil producers this year. Four out of six Gulf Cooperation Council states are part of the 12-member Organization of the Petroleum Exporting Countries.

“The oil price pulled up quite nicely over the weekend, which is helping investor confidence in the regional markets,” Saleem Khokhar, who helps oversee about $3 billion at NBAD Asset Management Group, said by telephone from Abu Dhabi. “The move today is purely sentiment driven.”

Oil fell almost 50 percent last year, the most since the 2008 financial crisis, after the highest pace of U.S. production in more than three decades swelled supplies and OPEC resisted calls to cut output. The decline in crude prices sent at least six stock indexes in the GCC, home to about a third of the world’s proven oil reserves, into bear markets since November.

Sabic Climbs

The valuation of Abu Dhabi’s shares rose to 11.2 times estimated 12-month earnings, compared with 10.6 for MSCI Inc.’s emerging markets index. The ADX’s 14-day relative strength index rose to 53, the highest since November.

FGB rose to 17.15 dirhams. National Bank of Abu Dhabi PJSC, the United Arab Emirates’ biggest bank by assets, jumped 4.2 percent, the sharpest increase since Jan. 13.

Shares in Saudi Arabia, the world’s biggest oil exporter, climbed 0.9 percent. Saudi Basic Industries Corp., the petrochemicals maker with the second-highest weighting on the index, rose 1.5 percent even after a slide in profitability. The company reported a 29 percent drop in fourth-quarter profit to 4.36 billion riyals ($1.16 billion) as lower oil prices reduced returns.

The mean estimate of seven analysts was for 5.39 billion riyals, according to data compiled by Bloomberg.

The weaker profit numbers were “widely expected by the market,” Sebastien Henin, who oversees $100 million as head of asset management at The National Investor in Abu Dhabi, said by phone. “The increase in oil prices over the weekend has lent good support to Sabic today.”

Israel Gains

Dubai Islamic Bank PJSC, the largest Shariah-compliant lender in the U.A.E., led advancers in Dubai with a 1.4 percent increase. Arabtec Holding Co., the biggest listed construction company in the country, added 2.6 percent to 3.20 dirhams, the strongest level since Dec. 28.

Elsewhere in the region, Kuwait’s SE Price Index climbed 0.8 percent and Oman’s MSM 30 Index added 1.1 percent. Bahrain’s BB All Share Index advanced 0.4 percent. Egypt’s EGX 30 Index declined 0.3 percent, the first drop in five days.

Israel’s TA-25 Index increased 0.3 percent to 1,466.94. The yield on the country’s March 2024 bonds dropped one basis point to 1.91 percent.

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