Oil price rally drives M’ East equities higher

Abu Dhabi stocks entered a bull market, leading Mideast gauges higher, as rising oil prices added to growing bullish sentiment across global equities.

The ADX General Index climbed 3.1 per cent at the close, extending the longest winning streak this year and taking gains since a Jan. 21 low to 22 per cent. Dubai’s DFM General Index, which entered a bull market last month, increased 2.9 per cent and Kuwait’s SE Price Index added 0.7 per cent.

Brent crude rallied a fifth day on Friday, the longest winning streak since November, and stocks climbed after U.S. employers added more jobs than projected and Nigeria’s petroleum minister said OPEC members and Russia may meet to discuss capping output later this month. Governments in the six-nation Gulf Cooperation Council rely on income from crude to fund spending, and stock markets often move in tandem with oil prices.

“Lots of expectation has been built into the potential meeting at the end of the month, and that helped oil kick on,” said Julian Bruce, the head of institutional trading at EFG-Hermes U.A.E. Ltd. in Dubai, a unit of the biggest publicly traded Arab investment bank. “Relatively encouraging moves across the emerging-market space” and globally are also boosting the rally in the United Arab Emirates’ markets, he said.

Brent crude rose 4.5 per cent to $38.72 per barrel on Friday, the highest level in three months. Emerging-market equities posted their best week since December 2011 and the Standard & Poor’s 500 Index had a third straight weekly advance.
Abu Dhabi Overbought

First Gulf Bank PJSC, the lender with the biggest weighting on the ADX General Index, led the advance as it jumped 4.7 per cent. Emirates Telecommunications Group, the company with the second-biggest weighting known as Etisalat, added 3.6 per cent

The rally sent the index above its Upper Bollinger Band, a sign to some traders that the gauge may decline. It also lifted the ADX’s 14-day relative strength index to 78, well above the threshold of 70 that some investors use to determine if a security is overbought.

The Bloomberg GCC 200 Index, a gauge of the region’s 200 biggest and most liquid companies, added two per cent to the highest level in two months. The positive sentiment in the region came despite an announcement from Moody’s Investors Service on Friday in New York that it was placing more than 10 oil producing nations on review for potential downgrade, including Saudi Arabia, the U.A.E., Qatar and Kuwait in the GCC.

Moody’s cut Bahrain to Ba1, the highest junk rating, and placed it on review for a further downgrade. Still, Bahrain’s BB All Share Index advanced for a third straight day, rising 0.1 percent.

Arabtec Holding Co. was the most traded stock in Dubai, extending its steepest weekly gain in seven years. Traders exchanged about 304 million shares in the builder, six times the six-month average. The stock rose 13 percent to the highest level since October.