CAIRO/DUBAI, (Reuters) – Signals of political stability lifted risk appetite and the bourses in Egypt and Kuwait on Tuesday while other Gulf markets were mixed, showing little reaction to rising tensions over a European ban on oil imports from Iran.
Cairo’s index rose 3 percent to its highest close since Nov. 16. It extended gains after the opening on Monday of Egypt’s first freely elected parliament in 60 years.
“Yesterday (Monday) was the first session for the elected parliament. This is positive political news,” said Abdalla Hassan of Osool Brokerage. “If the anniversary of the 25th of January revolution passes peacefully, the market will rise again because most Egyptian stocks are undervalued now.”
Activists plan protests throughout Egypt on Wednesday to mark the first anniversary of the revolution that overthrew Hosni Mubarak. Many demonstrators will demand that military rulers hand over power to parliament immediately.
Orascom Telecom (OT) soared 9.8 percent on its third day of trade after an eight-week suspension while it spun off businessman Naguib Sawiris’s assets.
In Kuwait, the index rose 0.6 percent, making its largest one-day gain since September. Investor sentiment improved ahead of parliamentary elections, lifting the market to its highest close since Dec. 20.
Kuwait’s emir called a parliamentary election for Feb. 2, after he dissolved the chamber following a long-running dispute with the cabinet that has paralysed politics in the country.
“People are hearing about who will be in the new parliament and thinking positive things will happen in the next month or so and it is being reflected in the market,” said a Kuwait-based trader who asked not to be identified.
Elsewhere, UAE’s markets extended gains on accumulation on bluechips in anticipation of fourth-quarter earnings.
Dubai’s index rose 1.7 percent to its highest close since Dec. 19 as trading volumes spiked.
Abu Dhabi real estate stocks jumped with Aldar Properties up 6 percent and Sorouh Real Estate rising 5.3 percent. The benchmark ended 0.4 percent higher.
Gulf sentiment was steady after the European Union agreed to ban Iranian oil imports and some Iranians repeated threats to block the Strait of Hormuz.
“At this point, people are still thinking that it will not get heated to the point of oil supply disruption through the Strait of Hormuz,” says Abdul Kadir Hussain, chief executive of Mashreq Capital. “There will be geopolitical premium but hopefully that would dissipate over the next few weeks.”
In Qatar, the index slumped to a four-month closing low, slipping 0.3 percent as dividends disappointed.
Qatar Islamic Bank fell 1.9 percent, Masraf Al Rayan shed 1.3 percent and Doha Bank lost 2.4 percent.
Doha’s bourse was the only Gulf market to mark gains in 2011 but an expected retracement has over-extended, traders said.
Elsewhere, Saudi Arabia’s benchmark ticked up 0.09 percent, extending the month’s gains to 0.8 percent.
The market is slowly recovering after a sell off last week on disappointing earnings from petrochemical companies.
“Cash will return to small-caps that provide more chances for gains due to higher volatility,” said Tarek Al Mady, an independent financial analyst based in Saudi Arabia.