DUBAI: Egypt’s bourse rallied 2.4 percent Sunday as a draft constitution gained traction and an interest rate cut boosted sentiment, while most Gulf shares also rose. Egypt’s Al-Nour Party, the second-largest Islamist political group, said it would support a new constitution in an upcoming referendum in order to spare the country “more anarchy.”
“Sentiment has improved in the market over the voting process of the constitution – it seems there is a coalition forming,” said Islam Batrawy, a Cairo-based trader.
Separately, the country’s central bank Thursday reduced its key interest rates by 50 basis points each, saying it was more concerned about boosting growth than taming inflation.
Batrawy said expectations of a liquidity boost from lower interest rates, which would attract higher investment to the country, were also spurring buying activity on the market.
Cairo’s benchmark index climbed 2.4 percent to 6,484 points, its third consecutive gain but approaching resistance at the year’s intraday peak of 6,510 points hit on Nov. 20.
The main support was heavyweight Commercial International Bank, which surged 4.8 percent to a record high. It extended gains since a price adjustment on a bonus share issue attracted buyers.
In Saudi Arabia, the measure advanced 0.9 percent to 8,321 points, its third straight gain since it dropped to a four-week low.
“The market is in a consolidation phase between 8,200-8,350 points and volumes are also low, which is a requisite of a consolidation,” said Aiyaz Hassan, senior technical analyst at Riyad Capital. The overall trend is bullish and the index could target the 8,700 level in the three to six-month period if it breaks above the next resistance, he added.
The 8,425 level is the Nov. 18 intraday high of the year.
Large-cap Saudi Basic Industries Corp climbed 1.2 percent, while food firm Savola Group rose 3.1 percent.
In the United Arab Emirates, Abu Dhabi’s small-cap stocks lifted the market to a five-year high as local investors bought laggards.
The index climbed 1.3 percent to its highest close since Sept. 2008. It is up 51.7 percent year-to-date, behind Dubai’s 88.3 percent surge.
Recovery in the real estate and banking sector, an upgrade to emerging-market status from index compiler MSCI and Dubai’s successful bid to host the World Expo 2020 have contributed to lifting investor sentiment and a bullish outlook for the country.
Small-caps Abu Dhabi Ship Building and Union cement each jumped 14.8 percent.
“There’s heavy speculative trading on small-caps which are also cheap,” said Hisham Khairy, head of trading, institutional desk at MENA Corp.
Dubai’s index rose 1.4 percent to 3,056 points, a five-year high. The market crossed the psychologically important level of 3,000 Thursday, which is adding to the positive sentiment on the country’s bourses, Khairy said.
“I would expect money to flow out of Dubai and into Abu Dhabi because the index is still lagging and there are more opportunities for investors to play up prices,” he added.