Kuwait Zain Gains Most in Three Years on U.S. Bank Rescue Plan

By Glen Carey

Sept. 21 (Bloomberg) -- Zain, the Kuwaiti phone company with operations in 22 Middle Eastern and African countries, surged the most in almost three years following a global rally after the U.S. Federal Reserve and the European Central Bank agreed to inject cash into the financial system.

``This is mainly backed by the recovery we are witnessing in global capital markets all over the world,'' Chandresh Bhatt, an analyst at Kuwait-based Global Financial House KSCC, said today in a phone interview from Kuwait. ``The regional markets are following the U.S. and Asian markets higher.''

Zain advanced 7.3 percent to 1,760 fils as of 12:29 p.m., its largest advance since November 2005. The company said yesterday it raised $4.49 billion through a capital increase in which 99 percent of its shareholders subscribed.

National Mobile Telecommunications Co., the Kuwaiti phone company bought by Qatar Telecom Q.S.A. last year, gained 14 percent to 1,620 fils.

U.S. stocks surged last week in the biggest two-day global rally in 38 years after the Federal Reserve, the European Central Bank and the Bank of Japan agreed with counterparts in Switzerland, the U.K. and Canada to inject cash into the financial system. Yesterday, the Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets.

``Telecom companies have the most sustainable cash flow, compared with any other sectors in this region,'' Kunal Bajaj, an analyst at HSBC Holdings Plc, said in a telephone interview from Dubai. ``This sector is considered to be a safe haven.''

Global Investment House has a ``hold'' rating for Zain and a ``buy'' for National Mobile, while HSBC has a ``neutral'' rating for Zain and an ``overweight'' for National Mobile.

To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net.