Dubai Stocks Rise to 3-Week High, Leading Gains in Gulf Markets

Dubai stocks climbed to the highest level in three weeks, leading Arab Gulf markets higher, as low valuations lured investors who are hunting for bargains.

The DFM General Index, which sank to the cheapest value in almost three years this month, climbed the most in almost a week to 3160.92 at the close. Arabtec Holding Co., the United Arab Emirates’ largest publicly listed construction company, was the most-traded stock. The Tadawul All Share Index in Saudi Arabia climbed 0.1 percent. Israeli stocks climbed to a more than two-week high at the close in Tel Aviv.

“Investors are attracted by the depressed valuations and are looking for bargains,” said Nabil Farhat, an Abu Dhabi-based partner at Al Fajr Securities. “It’s like fishing in a barrel.”

The advance in Dubai stocks extended two weeks of gains, the longest rising streak since September, after falling oil prices put pressure on regional markets and lowered valuations. Government revenue in the six-nation Gulf Cooperation Council declined this year as Brent crude sank this month to the lowest level in 11 years. For a region where state spending is one of the biggest drivers of growth, a slump in oil prices could curb company earnings and economic expansion.

Brent crude gained 4.9 percent in two days last week to $37.89 per barrel on Thursday after sinking to the lowest level since July 2004 on Dec. 22. Stock markets in the U.A.E., Kuwait and Oman were closed on Thursday for a public holiday.

Dubai’s stock valuations fell to 9.4 times 12-month projected earnings on Dec. 14, the lowest since January 2013. It has since risen to 10.2. Arabtec’s stock advanced 2.4 percent as traders exchanged 117 million shares, more than three times the company’s three-month daily average volume.

Saudi Budget

Al Rajhi Bank’s 0.7 percent gain was the biggest contributor to the advance in Saudi Arabia’s benchmark stock index.

The government may announce its 2016 budget on Monday, according to state-run broadcaster al-Ekhbariya, its first under King Salman. Given that most of the kingdom’s income comes from oil, the drop in crude prices has forced the state to dip into its foreign reserves and withdraw deposits from banks, forcing lenders to increase borrowing costs.

The three-month Saudi Riyal Interbank Offered Rate climbed for a 37th day on Sunday, the longest streak since 2008, to 1.505 percent, the highest level in seven years.

Kuwait’s SE Index rose 0.5 percent, Qatari shares added 0.4 percent and Oman’s Muscat Securities MSM 30 Index increased 0.3 percent. The Bahrain Bourse All Share Index and Abu Dhabi’s ADX General Index advanced 0.1 percent, each.

Egypt’s EGX 30 Price Index declined for the first time in two weeks, retreating 0.9 percent at the close. The nation’s central bank on Thursday raised interest rates for the first time in more than a year in an effort to curb inflation. Commercial International Bank Egypt SAE led the drop, falling 1.5 percent.

Israel Gains

Israel’s TA-25 Index rose for a third day, the longest winning streak since Nov. 22, gaining 1.1 percent at the close in Tel Aviv.

Oil and gas explorers Avner Oil Exploration LP and Delek Drilling LP advanced 3.1 percent and 1.9 percent, respectively, after getting government permits to sell their smaller offshore gas fields, Karish and Tanin, as part of the implementation of the nation’s natural gas policy.

Government bonds due 2025 rose, with the yield falling four basis points to 2.08 percent.

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