Saudi, UAE shares rise on interest rate hike
Saudi Arabia, Kuwait, UAE and Bahrain hiked their interest rates by 25 basis points after the Fed announced its first rate
Markets in Saudi Arabia and the United Arab Emirates rallied Thursday after their countries followed the US Federal Reserve by hiking interest rates, but other Gulf bourses showed little response.
Saudi Arabia, Kuwait, UAE and Bahrain hiked their interest rates by 25 basis points after the Fed announced its first rate increase in more than nine years on Wednesday. Qatar and Oman have yet to act.
All Gulf Cooperation Council (GCC) member states except Kuwait peg their currencies to the US dollar.
Dubai Financial Market Index rose 2.7 percent to close the day above the key 3,000-point mark supported by the banking and real estate sectors.
Its sister Abu Dhabi Securities Exchange also gained 2.05 percent, consolidating its position above the 4,000-point mark.
The Saudi Tadawul All-Shares Index rose 2.3 percent by mid-session to go above 7,000 points.
The Arab world's largest stock exchange was strongly supported by a 4.4 percent rise from the banking sector.
Qatar Exchange, the second largest Arab bourse, inched up 0.5 percent but failed to break the 10,000-point level which it dipped below last week.
Sebastien Henin, head of asset management at Abu Dhabi-based The National Investor, said markets were benefiting from a more certain show of intent from the Fed.
"Following the Fed's decision to hike interest rates, now the picture is clear after years of uncertainty. Now investors know that a new cycle has started and the path is clear," Henin told AFP.
The bourses of Kuwait and Oman remained almost unchanged while markets in Bahrain dropped 0.8 percent.
Gulf exchanges have been reeling under the impact of low oil prices and prospects of cuts in public spending thus negatively affecting the private sector.
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