Gulf Arab markets were steady on Tuesday, consolidating recent gains, with investor risk appetite rising as concerns over unrest in Bahrain eased, while traders seemed unfazed by political turmoil in Yemen. UAE markets rose, with traders increasingly betting the country's safe haven status will boost stocks. Dubai's benchmark hit a month-high, while Abu Dhabi volumes hit a three-month peak.
Emaar Properties and Emirates NBD, Dubai's two top stocks, rose 1.7 and 1.3 percent respectively. "Politically speaking, things are looking a lot clearer now ... the GCC is pretty much immune to what's happening outside its borders," said Haissam Arabi of Gulfmena Alternative Investments. "The worst is over for the GCC."
Seven people have died in a crackdown in Bahrain over the past week, with the country now under martial law as the Sunni monarchy tries to stamp out dissent among the Island's Shia majority. The later-closing Saudi Arabia index slipped 0.2 percent after being up in early trade, trimming its weekly gains to 4.5 percent.
"Initially, there was de-risking across the region, but at some stage people had to realise that this was overdone and so markets have come back strongly," said Shahid Hameed of Global Investment House. "We're not in a doomsday scenario, at least in the Gulf. The fear was that Bahrain unrest would spread to Saudi Arabia, but the situation in Bahrain has calmed down."
Saudi Basic Industries Corp fell 0.5 percent, weighing on the petrochemicals index, which eased from Monday's five-week high. "The Q1 2011 earnings season will drive the action in the coming weeks as investors refocus their attention on fundamentals," said Amro Halwani of Shuaa Capital in Riyadh.
Saudi investors were little moved by turmoil in southern neighbour Yemen. President Ali Abdullah Saleh told army commanders Yemen could descend into civil war because of efforts to stage what he called a "coup". Kuwait's index hit a week high, as its largest lenders rose. National Bank of Kuwait gained 1.7 percent and Kuwait Finance House added 1.9 percent.
Zain ended flat at 1.32 dinar. The telecoms operator's stock is down 2.9 percent this week after the UAE's Etisalat withdrew a 1.7 dinars-per-share take-over offer for its Kuwait rival. Separately, Zain has agreed to sell its quarter-stake in affiliate Zain Saudi for $950 million.
"What's supporting Zain's stock is its dividend," said Hameed. "Zain is getting a good price for its (Zain Saudi) stake and there could be an extra dividend following the sale. Zain Saudi was a loss-making operation, so getting it off Zain's balance sheet should create a spike in earnings this year on top of the sale proceeds."
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