Global liquidity is finding a home again in equities. Despite the perceived volatility in the regional markets as investors remain wary of developments in the global markets, the Gulf bourses managed to extend the gains this week, buoyed by favorable earnings of listed companies in the first quarter. “The Saudi bank results so far have been very strong and were not seeing any deterioration in the quality of assets,” Rami Sidani, Schroders head of regional investment, said. “Banks are the barometer for the economy and so these results show the health of the Saudi economy, bolstering investor optimism.” On a weekly basis, the Tadawul All Share Index (TASI) rallied for the fifth week in a row this week, driven by the positive first quarter results scored by Saudi banks and petrochemical firms, particularly the Saudi Arabian Fertilizers Co. (Safco). TASI climbed 6.7 percent this week, closing at 5,377.24 points. However, on a daily basis, the Tadawul index fell at its closing on Wednesday from Tuesday. Saudi inflation eased from 6.9 percent to six percent last month on lower food prices and imports. Disinflation usually weighs on precious metal prices and lures investments into money market products. TASI is currently 12 percent higher than the year's start, according to the weekly report of the Riyadh-based Bakheet Investment Group (BIG). The Saudi stock market also drew momentum from a decision by the Saudi Arabian Monetary Agency (SAMA) to trim the reverse repo rate by 25 basis points in response to the declining inflation pressures in the country, the report said. The BIG said that the market would be eyeing further results of listed firms, particularly the Saudi Arabian Basic Industries Corp. (SABIC), the profits of which “will have a strong impact on the market.” There is improvement in confidence due to rising oil prices and better-than-expected first quarter corporate profits, Wajdi Makhamrerh, chief operating officer at the Amman-based Sanabel International Holding, said. “But we think speculation is still the dominant factor with investors coming under psychological pressure from world markets rather than focusing on fundamentals, he said. Traders continue to focus on small caps rather than taking long-term positions to avoid losses, he added. Kuwaiti stocks rallied for the third consecutive week, as the Emir Sheikh Sabah Al-Ahmad Al-Sabah set May 16 as date for the general elections after dissolving the parliament. The KSE all-share price index gained 2.1 percent this week, to close at 7,418 points. The United Arab Emirates shares extended gains this week giving the impression that the upward trend would continue in the coming weeks, Husam Husseini, head of brokerage at the Dubai-based Amana Company for Financial Services, said. The benchmark prices of the Dubai and Abu Dhabi stock exchanges gained 1.43 percent and 1.26 percent his week, closing at 2,679 points and 1,712 points, respectively. The main index of the Abu Dhabi Securities Exchange ended 1.26 percent higher at 2,679.77, its best level in nearly four months when it closed at 2,711.55 on Dec. 17. The index was up by 5.38 percent from a week ago. The Bahrain Stock Exchange (BSE) index is still on track to form a rounding or saucer bottom by gaining 0.7 percent, closing at 1,674.45 points. “When the markets have fallen, the pull-back has been modest and thats encouraging local liquidity to remain active,” Ali Khan, head of cash-equity trading at Dubai-based Arqaam Capital, said. “Since the fourth quarter of 2008 risk appetite has significantly increased regionally and globally. From a regional perspective, Khan said, UAE stocks offered the most attractive valuations, while Saudi shares continue to trade at a premium so far justified by first-quarter results. However, other analysts were more cautious and warned profit
