Gulf stock markets rise with optimism about China’s economy

Reuters/Thomas Peter

• China’s lifting of coronavirus restrictions boosts demand for energy
• Most Gulf currencies are pegged to the US dollar

Gulf stock markets closed higher on Tuesday on expectations of economic recovery in the world’s second largest economy, China, and smaller interest rate hikes from the US Federal Reserve.

The Fed will end its tightening cycle after a 25-basis-point hike at each of its next two policy meetings and then likely hold interest rates steady for at least the rest of the year, according to most economists in a Reuters poll.

Most Gulf currencies are pegged to the US dollar, while Saudi Arabia, the UAE and Qatar usually mirror US monetary policy changes.

The International Energy Agency (IEA) said on Wednesday that China’s lifting of coronavirus restrictions should bring global demand to a record high this year. OPEC also forecast a rebound in Chinese demand.

• Resurgence in Chinese travellers is boon for Gulf tourist traps
• UAE capital markets set for ‘significant growth’, says regulator

The benchmark index in Saudi Arabia added 0.3 percent, lifted by gains in materials, financial and energy sector stocks, with oil giant Saudi Aramco continuing its gains since Monday, rising 0.6 percent. The world’s largest Islamic
bank by market capitalisation, Al Rajhi Bank, rose 0.8 percent.

In Abu Dhabi, the index rose 0.6 percent, ending its four session losing streak, with the country’s biggest lender First Abu Dhabi Bank surging 2.7 percent and real estate developer Aldar Properties rising 1.3 percent.

The developer said on Monday that the first phase of ‘The Sustainable City – Yas Island’ was sold out within 24 hours, generating over AED 1 billion ($272.2 million) in sales.

Dubai’s benchmark index bounced back from two sessions of losses, rising 0.4 percent. The index was lifted by gains in financial and real estate stocks, with Dubai Islamic Bank up 2.2 percent and Mashreqbank climbing 3.1 percent, while
real estate heavyweight Emaar properties added 0.3 percent.

The Qatari index rose 0.7 percent, extending its rally since Thursday, with almost all its constituent stocks gaining.

Qatar Islamic Bank continued its gains with a 2.3 percent rise and Qatar International Islamic Bank rose 1.7 percent.

Outside the Gulf, Egypt’s blue-chip index climbed 1.6 percent, continuing its rally since Wednesday.

“The Egyptian stock market continued to see a surge in investments from international traders”, said Daniel Takieddine, CEO MENA at BDSwiss.

“The index could maintain its uptrend as the country continues to secure financing deals from international institutions”.

Egypt has signed a $1.5 billion financing agreement with the International Islamic Trade Finance Corporation to fund its trading, including imports of energy products and essential commodities.