DUBAI, (Reuters) – Saudi Arabia’s index hit a fresh 21-month closing high on Monday, nearing a psychologically-important resistance level as volumes surged in bluechip stocks, while most other regional markets also extended gains.
The kingdom’s benchmark climbed 0.3 percent to 6,895 points, its highest finish since May 2010.
Saudi Basic Industries Corp (SABIC), the top company in the Middle East by market value, gained 1.3 percent, the main support for the market. Volumes traded in the stock jumped to their highest in six months.
“Saudi Arabia’s stock market is setting up to break through a three-year consolidation range and a firewall resistance at 7,000,” said Musa Haddad, head of MENA equity desk at National Bank of Abu Dhabi.
“Such breakout on high volumes sets the stage for a long term uptrend towards 8,000 to 10,000 levels.”
The focus has shifted from small-cap, speculative stocks toward bluechips and heavyweights.
“I feel this trend will pick up steam, attract further cash flows from local investors, and catapult the market to the next level,” said a Riyadh-based trader who asked not to be identified. “The extra cash that has been deployed in the market recently is critical to get past resistance barriers.”
Heavyweight Al Rajhi Bank gained 1 percent, Saudi Electricity rose 1.4 percent and Saudi Arabian Mining (Maaden) climbed 3.5 percent, all trading high volumes.
In UAE, Abu Dhabi’s bluechips lift the emirate’s index by 0.6 percent to a four-month high as they played catch-up to early-year gains on other Gulf markets.
Heavyweight National Bank of Abu Dhabi was the main support, rising 1.4 percent, while First Gulf Bank climbed 0.8 percent.
Sorouh Real Estate and Dana Gas jumped 4.8 and 4.3 percent respectively.
The UAE capital’s index climbed 0.6 percent to its highest close since Oct. 30.
In Dubai, the index slipped from Sunday’s eight-month peak as investors booked profits in large-cap stocks.
Dubai Islamic Bank fell 1.4 percent, Emirates NBD slipped 0.7 percent and telecom operator du shed 1.3 percent.
“The momentum is stretched and we had no news to fuel this rally – I would not be surprised to see 2 to 3 percent come off the market in coming days,” said Sebastien Henin, portfolio manager at The National Investor.
Regional sentiment was lifted on back of gains in world markets on optimism the second bailout package for Greece will be approved on Monday.
“The overall picture – whether it is global markets or oil – is good, but from a momentum point of view we need a break. Even if there is positive news from elsewhere, the market will not avoid a correction,” Henin said about Dubai’s market.
Elsewhere, Qatar’s benchmark extended gains, rising 0.3 percent. The market is lagging its regional peers with year-to-date losses at 1.5 percent.
In Kuwait, the index rallied for a third-straight session, up 0.5 percent to its highest close in seven months.
Local investors continue to buy into small-cap stocks, a common trend in the first quarter according to analysts.