Gulf Stocks Follow Emerging Markets Higher After Rebound in Oil

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  • All major GCC equity indexes gain; Israeli shares climb
  • Equities in Dubai, Qatar lead advance in Gulf markets

Iran Opens Its Oil Sector

Stocks in Dubai and Qatar led gains in Gulf equities, tracking emerging market increases as Brent crude prices recovered.

The DFM General Index climbed for a second day, adding 1.1 percent at the close. Doha’s QE Index advanced 1 percent as all but two of its members rose. The Bloomberg GCC 200 Index, a gauge of the largest and most liquid shares in the six-nation Gulf Cooperation Council, traded 0.6 percent higher.

Emerging-market stocks rose to the strongest level in a year last week as a rebound in oil prices and optimism that central banks will keep monetary policy accommodative boosted demand for higher-yielding assets. Equities across the GCC typically fluctuate with energy prices because governments in the region rely on income from crude sales to fund public spending.

“Local markets are moving with a high correlation to oil and developing markets globally,” said Talal Touqan, the head of research at Abu Dhabi-based Al Ramz Capital LLC, a brokerage and investment bank. “The valuation gap between developed and developing markets widened during the first half of the year, opening some space for cherry pickers to bargain hunt value stocks.”

Brent crude rose 4.3 percent in the five days through Friday to $44.27 a barrel. Citigroup Inc. and Bank of America Merrill Lynch said last week they expected oil’s slip into a bear market to be brief as the global supply glut eases.

Emaar Properties PJSC, the developer of the world’s tallest tower, contributed most to the advance in Dubai’s main stock index with its 0.9 percent gain. Companies on emirate’s benchmark gauge trade at about 10 times expected 12-month earnings, compared with a peak of more than 19 times two years ago, according to data compiled by Bloomberg. The DFM’s 50-day moving average crossed its 100-day measure last week, a signal to some analysts that the index may be poised to extend gains.

Qatar’s QE Index climbed as about 274 million Qatari riyals ($75 million) of shares exchanged hands. That’s about a quarter more than the daily average over the past three months. The gauge’s 9.2 percent increase since the end of June makes it the GCC’s best performer, after posting declines in each of the previous four quarters. MSCI Inc.’s emerging markets index is up 6.2 percent this quarter.

Saudi Arabia’s Tadawul All Share Index climbed 0.7 percent. Abu Dhabi’s ADX General Index rose for a third day, adding 0.4 percent. Kuwait’s SE Price Index increased 0.6 percent. Oman’s MSM 30 Index and Bahrain’s BB All Share Index each increased less than 0.1 percent.

Egypt’s benchmark EGX 30 Index fell from the highest level in more than a year, decreasing 0.4 percent, trimming its gain this quarter to 18 percent. Still, the gauge is the world’s best performer out of about 90 gauges tracked by Bloomberg so far this quarter on bets that North Africa’s biggest economy will devalue its currency as part of an effort to reach a loan agreement with the International Monetary Fund.

Israel’s TA-25 Index climbed 1.1 percent at the close in Tel Aviv to the highest level since April 25. Shares in OPKO Health Inc. and Frutarom Industries Ltd. were the biggest contributors to the advance.

The yield on the nation’s 6.25 percent bonds due in 2026 rose five basis points to 1.74 percent.