Bargain hunter helped lift Saudi stocks on Wednesday, after sentiment was boosted by the appointment of a new central bank governor, while other regional markets ended mixed. The kingdom's index climbed 0.8 percent, rising after Tuesday's decline when investors sold off small caps.
"Today, most of the reaction is bargain-buying," said Farouk Miah, acting head of research at NCB Capital. "Yesterday, decent quality stocks were sold off based on nothing." Some analysts said the market took support from the appointment of a new central bank governor in a limited cabinet reshuffle, which some believe could accelerate reform.
Fahd bin Abdullah al-Mubarak, the former local managing director of Morgan Stanley and chairman of the Saudi stock market, was appointed head of the central bank. "The reshuffle itself puts the right people in the right place," said Saudi-based financial analyst Mohammad Omran. Saudi Arabian Fertilisers gained 1 percent, National Industrialisation rose 0.5 percent, and Yamamah Cement climbed 5 percent.
In Oman, the index rose 1.2 percent to a 12-week high. Oman Telecommunications rose 3.1 percent, Bank Muscat gained 1.4 percent and Ahli Bank climbed 2.3 percent. "The rally in front line counters reveals that the market is seeing new fund allocations," said Kanaga Sundar, Gulf Baader Capital Markets head of research. "Investors are looking for dividends and valuations."
UAE markets ended lower in muted activity ahead of an expected decision by index compiler on whether to upgrade the country to emerging market status. Dubai's index declined 0.6 percent. "An upgrade is not priced in and therefore even if there is a negative reaction or disappointment, it will be for a day or two and shouldn't have a major impact," said Haissam Arabi, chief executive and fund manager at Gulfmena Investments.
"If we do get upgraded however, there will be positive impact so long as global markets are going to give us a chance to rally. We are at their mercy," he added. Index compiler MSCI will announce its decision on late Wednesday if it will upgrade UAE and Qatar from frontier market status. Emaar Properties slipped 1.8 percent, Emirates NBD shed 0.6 percent and Dubai Financial Market fell 1.4 percent. These stocks are the likely candidate for an upgrade.
Abu Dhabi's index slipped 0.2 percent to 2,443 points, 31 points away from hitting a new March 2009 low. "There is already a lot of pressure on stocks, and there is a chance it could fall back to previous lows should the (MSCI) decision be negative," said Amer Khan, a fund manager at Shuaa Asset Management. In Egypt, the main benchmark climbed 0.3 percent as the second phase of parliamentary voting kicked in. Qatar and Kuwait ended near-flat.