DUBAI: Regional markets rose sharply Sunday after the U.S.-Russian deal on removing Syria’s chemical weapons appeared to avert, at least for the coming weeks or months, a U.S. military strike against Damascus. The Saudi benchmark climbed 1.8 percent to 8,034 points, its fifth gain in the last six sessions since it dropped to a two-month low on fears of a possible U.S. attack on Syria.
Gains were spread across sectors and the index broke minor technical resistance at 8,004 points, its early September high; stronger resistance lies on August’s multi-year peak of 8,223.
“The market reaction to Syria was overdone and fundamentals are reasserting themselves now as the situation eases,” said Alhasan Goussous, chief executive officer at Bakheet Investment Group.
Goussous said that overall, the Saudi market was cheap with valuations below historical levels. The index is trading at a price-to-earnings ratio of 14 times estimated 2013 earnings, according to Thomson Reuters data.
“I’m quite positive on the market for the rest of the year. It could rise above the high of the year,” Goussous added.
In the UAE, Dubai’s index jumped 4.8 percent to 2,660 points, up for a fourth session since it slumped to a two-month low. The market has recovered most of its losses since it plunged from an August peak of 2,762 points, and is up 63.9 percent year-to-date.
Real estate shares led gains and Union Properties surged 11.6 percent to a near four-year-high. The stock has risen 89.9 percent in 2013, mostly in the last four weeks. It was briefly suspended at the opening while the company notified the market of a board meeting.
In Abu Dhabi, small-cap Eshraq Properties rose 4.6 percent. The company said in March that it aimed to cross-list its shares in Saudi Arabia’s market; it said Sunday that it had been negotiating with several banks in Saudi Arabia to select a financial adviser to complete the cross-listing requirements.
Abu Dhabi’s benchmark rose 1.8 percent, while Qatar added 1.7 percent and Kuwait gained 1.9 percent.
In Egypt, Citadel Capital slipped 1.5 percent to 3.22 Egyptian pounds. The private equity firm has obtained regulatory clearance to ask shareholders to approve a 3.64 billion Egyptian pound ($528 million) capital increase, it said Sunday.
The announcement was a sign that Egypt’s capital markets are becoming more normal after the chaos of the Mohammad Morsi period, but the prospect of dilution worried some minority shareholders in Citadel.
“The market needs visibility on the use of funds in capital expenditure, or debt payments and/or financial restructuring,” Islam Batrawy, deputy director of sales and trading at Egypt’s Naeem Brokerage, said of the proposed share issue, which would occur at par value of 5 pounds per share.
“It also needs to see the terms of the rights issue. Citadel might need further funding in the future so there is a potential overhang on the stock.”
Citadel’s shares are down 13 percent year-to-date, underperforming the wider market. The company said it would give co-investors and partners in its platform firms a chance to become shareholders in Citadel.
The main Egyptian index gained 0.5 percent, leaving it nearly flat on the year.
Ezz Steel rose 0.8 percent after a government source said Egypt was considering imposing an anti-dumping duty on Turkish steel imports to protect the domestic industry.