Persian Gulf Shares Rise on Rate Cuts; Dubai Investments Climbs

By Haris Anwar

Nov. 2 (Bloomberg) -- Persian Gulf shares gained on optimism interest-rate cuts by central banks around the world will ease the global credit crisis, increasing demand for equities that have been ``oversold.'' Saudi Arabia's Index fell.

Dubai Investments PJSC, which owns stakes in more than 40 companies, climbed after saying third-quarter profit more than doubled. Zain rose for a fourth day as it more than doubled its stake in its Iraqi unit. Bank Muscat SAOG surged the most in more than two weeks.

The Dubai Financial Market General Index added 0.4 percent to 2,955.11, paring the decline for the year to 50 percent. The Abu Dhabi Securities Exchange General Index gained 1.5 percent and Oman's Muscat Securities Market 30 Index jumped 6.5 percent, the most since Oct. 14. Oman's measure slumped 27 percent last month.

``Risk appetite is increasing after last week's rate cuts,'' Sunil Dhall, vice-president at Gulf Baader Capital Markets SAOC, said in a telephone interview from Oman. ``The regional markets were already oversold, so what we're seeing is a rebound that might continue for some time.''

Saudi Arabia, Kuwait and Bahrain lowered key lending rates as the crisis gave Gulf central banks more flexibility in following U.S. Federal Reserve cuts. Gulf states tend to follow U.S. rate decisions to maintain their currencies' pegs to the dollar. U.S. stocks staged their steepest weekly surge in 34 years after the Fed's interest-rate cut and signs the credit crisis is ebbing boosted equities. The Standard & Poor's 500 Index climbed 1.5 percent on Oct. 31, and 10 percent during the week.

Qatari Surge

Before today's gain, Dubai's benchmark stock index was valued at 7.14 times the earnings of its 29 companies, the lowest level since at least February 2007, data compiled by Bloomberg show. Abu Dhabi's index now trades at 8.09 and Oman's measure at 5.98 times profit. The three are cheaper than the MSCI Emerging Markets Index, which Oct. 31 was valued at 8.24 times profit.

In Qatar, the DSM 20 Index surged 5.2 percent, the Kuwait Stock Exchange Index rose 0.8 percent and the Bahrain All Share Index added 0.5 percent. Saudi Arabia's Tadawul All Share Index declined 1.2 percent.

Dubai Investments gained 2.6 percent to 1.96 dirhams. Net income for the period climbed to 634.8 million dirhams ($173 million) as property sales increased.

Zain advanced 1.7 percent to 1,180 fils. The Kuwaiti phone company with operations in 22 countries in the Middle East and Africa raised its stake in its Iraqi unit to 62 percent from 30 percent.

Bank Muscat, Oman's largest lender, soared 7 percent to 0.963 rial, the biggest one-day advance since Oct. 14.

The following stocks also rose or fell in the region. Stock symbols are in parentheses after company names:

Abu Dhabi National Takaful Co. (TKFL UH), a United Arab Emirates-based Islamic insurance and reinsurance provider, surged 7.3 percent to 8.69 dirhams after it posted a third- quarter profit of 3.25 million dirhams compared with a loss of 277,465 dirhams in the year-earlier period.

Emirates Integrated Telecommunications Co. (DU UH), known as Du, rose 0.7 percent to 4.17 dirhams. The U.A.E.-based company beat estimates and posted its first profit as revenue rose after it added new subscribers.

Ithmaar Bank BSC (ITHMR BI), a Bahrain-based Islamic lender, climbed 8.9 percent, the most since Feb. 5, to 49 cents after announcing plans to set up a $6 billion fund to invest in Turkey with Abu Dhabi Investment House and Gulf Finance House EC.

To contact the reporter on this story: Haris Anwar in Dubai on Hanwar2@bloomberg.net