(MENAFN - Arab News) Arab stocks extended gains last week, deriving momentum from rising global markets, surging oil prices and easing euro zone debt worries, financial analysts said Friday.
They expected crude prices, which traded on Friday near a two-year high of about 94 dollars per barrel, to give a boost to Arab stock markets in the coming weeks as cold bites further in the western hemisphere and appetite for risky assets improves.
"I believe oil prices will decide the direction of regional stocks for weeks to come as higher crude prices means larger surplus petrodollars which seek investment outlets, including stock markets," Wajdi Makhamreh, CEO of the Amman-based Noor Investments brokerage, told Arab News.
However, he expected Arab stock markets to be dominated by "window dressing" operations as the year draws to an end, whereby traders try to improve their closing balance sheets.
Saudi shares led the Middle East stock rally last week, receiving additional support from the Kingdom's revelation of a record budget with big spending potential.
The world's largest crude exporter said that it planned to spend 154.7 billion in fiscal 2011.
The Tadawul All Share Index (TASI) of the Arab world"s largest stock exchange gained 1.7 per cent on weekly basis, closing at 6,609.53 points, the highest in seven months. The liquidity for the week came in at SR15.36 billion as compared to SR16.70 billion for the past week.
On a week-to-week basis, the sector activity was all positive except one losing sector. The gaining sectors ranged from 0.50 percent by the agriculture and food industries to 4.04 percent by transport sector. On the other hand the losing sector was the insurance sector with -0.49 percent.
The top gainers for the week were The National Metal Manufacturing & Casting Co. with a gain of 14.45 percent to close at SR28.50 and The Jabal Omar development Co. with a gain of 9.93 percent to close for the week at SR17.70. The top losers for the week on the other hand were the Saudi Advanced Industries Co. with a loss of -3.59 percent to close at SR13.45 and The Company for Cooperative Insurance losing -2.72 percent to close at SR 107.50, the Financial Transaction House said in its weekly market commentary.
"I believe several sectors will benefit from the huge Saudi spending on development projects, foremost the banking, infrastructure, construction and the retail trade sectors," said Mohammad Anqari, a Riyadh-based Saudi analyst.
He conceded that Saudi stocks reacted excessively to developments on global markets in 2010, but expected the market to behave differently in 2011.
"I think the Saudi stock exchange will behave more logically in 2011, given the steps taken by the European governments to come to grips with the euro zone debt crisis and the satisfactory performance of the world economy in 2010," Anqari said.
Jordanian shares rallied ahead of the new year, drawing support from blue chips particularly the Arab Potash Co. and the Jordan Phosphate Mines Co., analysts said.
The all-share index of the Amman Stock Exchange gained 0.65 per cent last week, closing at 2,378 points, according to the ASE weekly report.
Kuwaiti stocks also rose this week ahead of the new year and the imminent inking of a multi-billion-dollar deal, whereby the Kuwaiti mobile group, Zain, will sell a 40 per cent interest to the UAE communications firm, Etisalat.
Kuwait"s KSE all-share index gained 0.42 per cent this week, to close at 6,882 points.
United Arab Emirates shares were the only losers in the Middle East last week, reflecting hesitation on the part of both local and foreign investors to take positions ahead of the new year, analysts said.
The benchmark of the Dubai stock exchange shed 0.49 per cent on weekly basis, closing at 1,631 points, while the all-share index of the Abu Dhabi bourse fell 0.35 per cent, to close week at 2,706 points.
Egypt"s AGX 30 index, measuring the performance of the market's 30 most active stocks, went up 0.7 per cent last week, closing at 6,951 points, and receiving support from renewed buying activity from local and foreign investors, analysts said.
By Abdul Jalil Mustafa