DUBAI, (Reuters) – Qatar’s index shrugged off early declines to hit a 26-month high on Tuesday as lower stock prices drew investors, helping extend a World Cup rally.
Masraf Al Rayan climbed 2.7 percent, Vodafone Qatar added 1.8 percent and Commercial Bank of Qatar rose 2 percent.
“Qatar volumes have picked up dramatically and new money is coming in to position for the long term,” said a Kuwait-based analyst who asked not to be identified. “There is some selling for investors who had been holding Qatar stocks for a long, long time as they waited for Qatar to recover from the 2008 crash, but others are buying into any weakness.”
The index climbed 0.9 percent to its highest finish since Sept. 29, 2008. It is up 7.7 percent since Qatar was chosen to host the 2022 soccer World Cup. Average daily turnover this month is more than double November’s and triple that of October.
“The market is stretched, but given Qatar’s prospects and continued buying, it’s still looking strong,” said the analyst.
Qatar’s gas sector will help the country’s economy expand 20 percent growth next year, the International Monetary Fund said on Monday, while economists polled by Reuters forecast GDP will grow 15.5 percent in 2010.
Saudi banks rallied, clawing back some of recent losses as investors switched cash from petrochemicals.
Samba Financial Group climbed 3 percent, Banque Saudi Fransi added 0.7 percent and SABB rose 1 percent. This trio, along with unlisted National Commercial Bank, agreed a $1.33 billion Islamic financing facility with Saudi Electricity Co (SEC) on Monday. SEC rose 1.1 percent.
“Banking was the worst performer among the main sectors, but it is now stabilising and starting to make gains,” said Saleh al-Onazi, vice-president of principal investment at Swicorp.
The banking sector index .TBFSI climbed 0.7 percent, trimming its losses since Sept. 25 to 4.7 percent. Bank shares fell following below-forecast third-quarter earnings.
Saudi Basic Industries Corp fell 0.2 percent and Yanbu National Petrochemical Co dropped 1.5 percent.
“It seems like Saudi petrochemicals have run out of steam and need oil to properly break above $90 for them to get another leg up,” said a Riyadh-based trader who asked not to be identified. “The focus is now shifting away from petrochemicals after they rallied hard for the past two months, with investors now looking for value elsewhere as we close out the year.”
Oil CLc1 was steady around $89 ahead of a U.S. Federal Reserve meeting.
Dubai’s index slumped to a new 13-week low after making its fifth straight loss. Emirates dropped 2.3 percent and fell 2.1 percent.
“Regional sentiment is positive, but UAE sentiment is still hinged on some high-profile companies,” said Abdul Kadir Hussain, chief executive and fund manager Mashreq Capital.
“We’re waiting for Nakheel restructuring to be finalised, as well as trying to figure out how deep the property market will be for banks, so there’s still some uncertainty.”
Dubai house prices are more than 50 percent below 2008 peaks, while Dubai World’s developer Nakheel plans to issue a sukuk to its trade creditors in the first quarter of 2011 as part of a multibillion dollar debt restructuring plan