Persian Gulf Shares Gain on Government Intervention, Oil’s Rise

By Haris Anwar

Jan. 25 (Bloomberg) -- Persian Gulf shares rose on speculation governments in the region will intervene to bolster market confidence and as crude oil climbed to a two-week high.

Kuwait Finance House KSC, the state’s largest Islamic bank, gained the most in a month after state news agency KUNA reported the central bank is preparing proposals to bolster the country’s economy. Qatar Islamic Bank increased for a second day as the country’s sovereign wealth fund bought a stake. Aramex PJSC advanced for the first time in five days after it bought Metrofile Middle East LLC. Crude oil surged 9.2 percent last week.

The Dubai Financial Market General Index gained 1.1 percent to 1,488.68. The Abu Dhabi Securities Exchange General Index added 2.4 percent, while Kuwait’s index rose 0.2 percent. Oman’s Muscat Securities Market Index jumped 5.2 percent.

“We’re getting positive signals from the government side,” Faisal Hasan, head of research at the Kuwait-based Global Investment House KSCC, said in an interview from Kuwait City. “It seems they are ready to step in and use their financial muscles to revive the confidence.”

Kuwait’s Central Bank will tomorrow present to the government proposals to bolster the country’s economy amid the global financial crisis, KUNA reported, citing Governor Sheikh Salem AbdulAziz al-Sabah. The plan includes help for financial institutions, the state-run news agency said yesterday. Kuwait’s banking index added 2.5 percent.

Liquidity

An Omani government fund created to help restore confidence in the stock market will start investing in a “few weeks,” said Abdulmalik Al-Hinai, Oman’s Undersecretary for Economic Affairs on Jan. 16. The 150 million-rial ($390 million) fund will invest in companies listed on the country’s stock market.

Gulf shares lost more than half their value since July as the global credit freeze halted a fourfold surge in Dubai home prices at the same time as a 70 percent drop in oil eroded export revenue.

Dubai’s benchmark index is down 9 percent this month following its 72 percent slump in 2008. It is valued at 3.57 times the earning of its 29 companies. Abu Dhabi’s index is valued at 5.49 times earnings, compared with a 12-month high of more than 16 reached in January last year, according to data compiled by Bloomberg.

Volumes

“One of the signs markets are very close to the bottom is very low liquidity,” Tom Healy, director general of the Abu Dhabi Securities Exchange, said in an interview today. Daily average volume on the Abu Dhabi bourse dropped 55 percent to 123 million shares in the second half of 2008 from 275 million shares in the first half, Bloomberg data show.

Crude rose in New York on Jan. 23 on speculation that stockpiles will decline as OPEC implements promised production cuts and investors purchased commodities as an alternative to stocks and bonds. Oil for March delivery added 6.4 percent to $46.47 a barrel on the New York Mercantile Exchange, the highest settlement since Jan. 6.

Kuwait Finance House gained 5.7 percent to 930 fils.

Qatar Islamic Bank climbed 3.2 percent to 65.1 riyals after Qatar Investment Authority bought 5 percent of the share capital.

Aramex, the Middle East’s biggest courier company, added 2.4 percent to 0.84 dirham after it bought Metrofile for an undisclosed amount to merge the documents and records management company with its unit Infofort.

Saudi Arabia’s Tadawul All Share Index gained 0.5 percent to 4,810.04. Qatar’s DSM 20 Index climbed 2 percent and the Bahrain All Share Index rose 0.5 percent.

Al-Salam Bank BSC, the Bahrain-based Islamic lender founded by investors from the U.A.E., climbed 9.4 percent to 0.093 dinar. The bank’s full-year profit rose 10 percent to 25.5 million dinars ($67.6 million).

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