Arab traders see light at the end of the tunnel, but volatility remains acute.JEDDAH: Gulf markets rose Sunday, with the Dubai and Kuwait benchmarks pulling away from six-year lows to track gains a day earlier on Saudi Arabia's bourse. Saudi Arabia's stock benchmark Tadawul All Share Index (TASI) ended higher for a second day since tumbling to a 22-month low. TASI traded in a 3.9 percent range, ending 0.92 percent higher at 5,762.50 points to advance for a second day since Saudi's finance minister said the economy was in "excellent" shape and a rise in oil prices would boost its already-strong financial position, also confirming state pensions had been buying local shares. "Buying is short-term and based on a market bounce, rather than a full recovery," said Walid Shihabi, Shuaa Securities chief executive. "Saudi Arabia is looking for direction and the main concerns remain." Gulf markets had tumbled in the wake of deadly unrest in Oman and Bahrain, sparking fears turmoil would spread. Some buyers have now returned, but volatility remains acute. "Gulf markets have been taking their cues from Saudi Arabia, with a very strong correlation," said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments. "This is a great opportunity to sell rather than buy – nothing much has really changed in terms of the regional political picture. There are rumors of more protests taking place in the Gulf." Samba Financial Group climbed 3.3 percent, Banque Saudi Fransi rose 2.8 percent and Saudi Basic Industries Corporation (SABIC) added 1.4 percent. "The comment about pension funds buying gave a degree of comfort to people who were considering stepping into the market," said Walid Shihabi, Shuaa Securities chief executive. "But buying is short-term and based on a market bounce, rather than a full recovery. Saudi Arabia is looking for direction and the main concerns remain." Dubai's index made its largest gain in four weeks, rising 2.7 percent to 1,389 points. Abu Dhabi benchmark gained 1.1 percent to 2,558 points. Oman index climbed 0.8 percent to 6,404 points. Kuwait benchmark rose 0.7 percent to 6,190 points. Bahrain measure climbed 1.3 percent to 1,396 points. Air Arabia climbed 2.2 percent and was the most active stock, accounting for about a fifth of all shares traded. The low cost carrier's shares had slumped on fears regional turmoil would disrupt its operations and as rising oil prices likely increased fuel costs for airlines. "Near term volatility should continue. Last week's sell-off was over-done," said Shahid Hameed, Global Investment House head of asset management for the Gulf region. Kuwait's index rose for a first session in four. Zain, subject to a protracted $12 billion takeover bid by the UAE's Etisalat, ended flat, having surged 4.7 percent in the preceding session. The telecoms firm has proposed a 200 fils per share dividend after it swung to a fourth-quarter profit. "It's mostly down to Saudi's rise yesterday, but there's also some euphoria from Zain announcing its dividend," said a Kuwait trader who asked not to be identified. "The market no longer thinks the Zain-Etisalat deal will go through, but a nice dividend yield is good compensation." Zain shares are widely used as collateral by investors to borrow from banks and lenders' shares were among the biggest gainers. Kuwait Finance House climbed 5.7 percent and Gulf Bank rose 3.2 percent. National Bank of Kuwait fell 1.5 percent after Moody's put Kuwait's largest listed lender on review for possible downgrade.
