Abu Dhabi stocks rose the most since March on bets the government may permit foreigners to buy shares of Emirates Telecommunications Corp. (ETISALAT), the largest publicly- traded company in the United Arab Emirates. Saudi shares gained.
Etisalat, as the phone company is known, advanced the most since January even after saying it’s not aware of a decision to change the law that governs foreign ownership. The ADX General Index (ADSMI) rose 0.6 percent, the most since March 25, to 2,454.47 at the close in Abu Dhabi. The Bloomberg GCC 200 Index (BGCC200) climbed 0.7 percent after Saudi Arabia (SABIC)’s Tadawul (SASEIDX) rallied 1.3 percent, the most since April 21. Bank Nizwa (BKNZ) jumped 13 percent in the trading debut of the first Omani Shariah-compliant lender.
A law that governs Etisalat may be amended to allow foreign and institutional investors to own the shares, Emarat Alyoum reported last week, citing people it didn’t identify. A change will help widen ownership of shares beyond U.A.E. citizens and give overseas investors’ access to Etisalat, which may post a 26 percent increase in profit this year, according to the mean estimate of eight analysts on Bloomberg.
“If the speculation is true, this would be good for the market as it could attract liquidity to the heavy-weighted stock, especially from foreign investors,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities, the 21st most active brokerage of 53 by value traded in May, according to the Dubai Financial Market. A change in the foreign ownership structure of the stock may help boost the U.A.E.’s chance of being promoted to emerging market status at MSCI Inc. (MSCI:US), he said.
The U.A.E. and Qatar are up for a potential upgrade from frontier market status at MSCI after the index provider delayed the decision twice in 2011. MSCI cited “stringent foreign ownership limits” such as limited availability of shares to foreign investors as a concern. About $3 trillion of funds are benchmarked against MSCI’s indexes globally.
Etisalat comprises 28 percent of Abu Dhabi’s index. The shares rallied 2.8 percent, the most since Jan. 29, to 9.07 dirhams.
Etisalat said last week the company had no knowledge of a decision to allow foreign and institutional investors to buy its shares. “Such a decision is ultimately a federal government decision,” Etisalat said in a statement.
About 56 million shares were traded in Abu Dhabi today, compared with a 12-month daily average of 62 million. Abu Dhabi Commercial Bank PJSC (ADCB), the U.A.E.’s third-biggest lender, gained 1.3 percent to 3.18 dirhams, the highest close since May 2.
Global stocks rallied last week, with the S&P 500 Index (SPX) rising 3.7 percent in its best weekly gain since December, amid speculation central banks in Europe and the U.S. will join China in trying to spur economic growth. The MSCI Emerging Markets Index (MXEF) gained 1.3 percent in the period, snapping an 11-week slump.
Spain became the fourth euro member to seek a bailout since the start of the region’s debt crisis more than two years ago with a request for as much as 100 billion euros ($125 billion) in loans to rescue its banking system.
Crude oil for July delivery increased 1.1 percent last week to $84.1 a barrel on the New York Mercantile Exchange. The Gulf Cooperation Council, which includes Saudi Arabia, the U.A.E., Qatar, Oman, Bahrain and Kuwait, sits on one-fifth of the world’s proven oil reserves.
Saudi Arabia’s stocks climbed to 6,749.49 led by Al-Rajhi Bank (RJHI), the kingdom’s largest lender, and Saudi Basic Industries Corp., the world’s biggest petrochemical maker. The country is OPEC’s biggest oil exporter.
In Oman, Bank Nizwa surged as much as 17 percent on investor speculation demand for Shariah-compliant services will grow. The shares, which have a nominal value of 0.100 rial, jumped to as high as 0.119 rial before trimming gains to close at 0.115 rial. Oman’s MSM30 Index (MSM30) decreased 0.5 percent.
Elsewhere in the Persian Gulf region, Bahrain’s measure climbed 0.5 percent. Kuwait’s gauge and Dubai’s DFM General Index (DFMGI) advanced 0.2 percent, while Qatar’s QE Index (DSM) fell 0.2 percent. In North Africa, Egypt’s EGX30 Index (EGX30) retreated 0.4 percent.
In Israel, the TA-25 Index (TA-25) gained 0.5 percent at the close in Tel Aviv. The yield on the country’s 5.5 percent notes due January 2022 rose two basis points, or 0.02 percentage point, to 4.45 percent.
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