(MENAFN - Arab News) Arab stock markets ended 2010 with on an optimistic note with investors upbeat over rising oil prices and predictions of good annual earnings for listed firms, financial analysts said Friday.
They also cited the easing euro zone debt crisis and signs of sustainable world recovery as additional factors that could lead to a rally at Middle East bourses early in 2011, particularly in the Gulf region.
"I believe surging oil prices and expectations of good annual results will be the key factors that will give a momentum to regional markets in the new year," an Amman-based portfolio manager told Arab News.
"I think regional investors will also be encouraged by the bullish performance of global markets, the US and European data indicative of a global upturn as well as by measures taken to come to grips with the European debt problem," he said.
He noted that oil was on Friday trading around 93 a barrel, "which refers to a tangible increase in Arab surplus petrodollars that are expected to seek investment outlets, including stocks".
"The fact that global markets closed the year on a two-year high will also have a positive impact on Arab stock markets in the new year," he said.
Saudi stocks were the key beneficiary in the Middle East in 2010, with the Tadawul All-Share Index (TASI) gaining 8.15 percent on annual basis, thanks to the strong performance of the petrochemical sector, analysts said.
The Saudi benchmark closed the year at 6,620.75 points, representing a 1.6 percent weekly gain. On a week-to-week basis, the sector activity was mixed with 7 out of 15 sectors closing with gains ranging from 0.19 percent by the Petrochemical Industries sector to 6.83 percent by the Media and Publishing sector. On the other hand the losing sectors for the week ranged from 0.13 percent by the Real Estate Development sector and by the Transport sector to 3.46 percent by the Cement sector, the Financial Transaction House (FTH) said in its weekly market commentary.
The top gainers for the week were the Gulf General Cooperative Insurance Co. with a gain of 16.25 percent to close at SR51.50 and the Tihama Advertising & Public Relations Co. with a gain of 12.40 percent to close for the week at SR29.00. The biggest losers for the week on the other hand were the Al-Ahlia Insurance Co. with a loss of 28.70 percent to close at SR36.90 and the Arabian Cement Co. Ltd. losing 10.24 percent to close at SR34.20, the FTH report said.
The Saudi stock market turnover for the week reached SR14.94 billion.
The petrochemical sector, which scored annual gains of 20.78 percent in 2010, helped the market to surmount the pressures of global fluctuations, said Saudi analyst Mohammad Shmaimri who runs a financial consultancy bureau in Riyadh.
However, he detected a weakness in the performance of the Saudi banking sector due to the increasing volume of toxic loans.
Another Saudi analyst Mohammad Anqari believed the Saudi stock exchange was viewing the new year with "optimism" mainly due to the huge spending the government planned to carry out in fiscal 2011 and the rising crude prices.
"An expansion of between 40 percent and 50 percent in the market's liquidity in December indicates that investors enter the new year with a positive outlook," he said.
The performance of the Amman Stock Exchange has been volatile in 2010, reflecting a prolonged loss of confidence and liquidity crunch, analysts said.
The ASE all-share index closed the year at 2,374 points, representing a 6 percent decline from a year earlier.
Kuwaiti stocks came under pressure last week from the fallout of a co-confidence vote facing Prime Minister Nasser Mohammad Al-Sabah on Tuesday, analysts said.
However, Kuwait's KSE all-share index gained 0.6 percent last week, closing the year at 6,955 points.
Kuwaiti investors will keep a close eye in the new year on political developments and the multi-billion-dollar deal, whereby the Kuwaiti Zain telecom group planned to sell a 46 percent stake to the United Arab Emirates telecommunication firm, Etisalat, analysts said.
The UAE stocks, which suffered heavily throughout the year from the Dubai World debt crisis, closed the year in the green, making benefit from news that the real estate group, Nakheel, would honor its Islamic bonds, sukuk, on time, analysts said.
The benchmark of the Dubai stock exchange closed unchanged from a week earlier at 1,631 points, while the Abu Dhabi index gained 0.5 per cent closing at 2,720 points.
Egypt's AGX 30, which measures the performance of the market's 30 most active stocks, closed the week at 7,142 points, representing a weekly gain of 2.7 percent.
Analysts attributed the market's active performance this week to "a strong demand on the part of foreign investment funds for blue chips."
The GulfBase GCC Index increased by 0.62 percent to 4,136.53 points last week. The value of GCC traded shares surged 9.13 percent to 5.73 billion and volume rose 14.51 percent to 2.43 billion of shares.
By Abdul Jalil Mustafa