* Mursi supporters signal may be willing for deal
* Egyptian pound strengthens, encourages buyers
* Saudi hits five-year high, breaks big chart barrier
* Kuwait slips but new cabinet seen positive
* UAE markets extend gains
By Nadia Saleem
DUBAI, Aug 4 Egypt's bourse surged to a
five-month high on Sunday as signs that supporters of deposed
president Mohamed Mursi might be willing to compromise with the
interim government raised hopes for a political resolution after
weeks of street violence.
A spokesman for a pro-Mursi delegation said it wanted a
solution that would "respect all popular desires", a sign that
supporters could be backing away from demands to reinstate
Also, the weekend passed without major violence. Many
investors had been concerned there could be more bloodshed if
the army took action against Mursi supporters protesting on the
streets; security forces shot dead 80 of them a week ago.
"There has been a slight fall in the political temperature
in the past couple of days - we haven't seen really serious
clashes such as those of early July," said Simon Kitchen,
strategist at EFG-Hermes in Cairo.
"The investment outlook on Egypt is improving but remains
Cairo's benchmark index rose 2.9 percent to 5,530
points, its highest close since Feb. 26, making its largest
one-day gain in nearly four weeks. Trading volume spiked.
The market may get a boost this week from the buyout of
Orascom Construction Industries (OCI) ; OCI, previously
Cairo's largest stock by market value, was removed from the main
index last week after Dutch-listed OCI NV acquired more
than 97 percent of the Egyptian firm in a cash-or-shares tender
offer. OCI NV said the offer would be settled on Aug. 5; some of
the money may go back into the stock market.
A surprise cut of the main official overnight interest rate
in Egypt by 50 basis points late on Thursday also supported
Egypt's pound continued to strengthen marginally on
Sunday in the wake of the rate cut, though it was unclear how
much the central bank was engineering the appreciation as a
Billions of dollars in Gulf aid promised since the army
overthrew the president have begun to trickle into the currency
market, easing pressure on the pound.
"Currency concerns have decreased for the short-term, but
you won't see foreigners pile in," Kitchen added.
Local investors were net buyers of Egyptian stocks on Sunday
while foreigners were sellers, bourse data showed.
The index appeared to stage a clean break of major technical
resistance around the 5,450-point area, which capped it in May
and July. The next major resistance is at the January peak of
In Saudi Arabia, the index rose 0.8 percent to 7,972
points, its highest since September 2008. It closed above a
major resistance at 7,944 points, the April 2012 peak; that is
long-term bullish and leaves no major chart barrier before 8,782
points, the 61.8 percent retracement of the fall from January
Trading volumes were healthy despite the approach of Eid
holidays later this week.
Sectors that benefit from local consumption led gains. The
retail sector index and telecommunications
rose 1.0 and 2.1 percent respectively; food and agriculture
gained 1.5 percent.
With limited growth seen in heavyweight Saudi banks and
petrochemical firms, investors are chasing mid-cap firms with
higher growth outlooks.
In Kuwait, the index slipped 0.7 percent, trimming
its 2013 gains to 35.4 percent. Investors are booking some
profits from the rally, but many see the choice of a new cabinet
on Sunday, after last month's parliamentary elections, as
Mustapha al-Shamali was appointed oil minister, after
serving as acting minister, and the finance ministry, which
Shamali previously led, will now be headed by Sheikh Salem
"People believe this is a parliament that will rejuvenate
the economy - it is also more inclusive of individuals with
different political inclinations," said Fouad Darwish, head of
brokerage services at Global Investment House.
Early last year Sheikh Salem resigned as central bank
governor after 25 years in the post, complaining about a rapid
rise in government spending. This suggests he could be something
of a budget hawk in his new job.
However, with Kuwait still posting large budget surpluses,
he is not expected to cut overall spending back, merely slow its
growth moderately. In any case the new parliament, seen as
willing to cooperate with the cabinet, is expected to give
increased priority to long-delayed development projects to spur
Elsewhere, underpinned by strong second-quarter earnings,
Dubai's measure rose 1.1 percent to a fresh 56-month
high, while Abu Dhabi's index gained 0.2 percent.
Dubai engineering and maintenance firm Drake and Scull
rose 2.6 percent in active trade. The firm was expected
to post earnings later on Sunday or on Monday; five analysts
polled by Reuters forecast a quarterly profit of 49.5 million
dirhams, a 90 percent jump from a year earlier.
Doha's index climbed 0.6 percent to its highest close
since September 2008.
* The index rose 2.9 percent to 5,530 points.
* The index rose 0.8 percent to 7,972 points.
* The index slipped 0.7 percent to 8,033 points.
* The index climbed 1.1 percent to 2,624 points.
* The index gained 0.2 percent to 3,931 points.
* The index advanced 0.6 percent to 9,765 points.
* The index gained 0.3 percent to 6,677 points.
* The index slipped 0.6 percent to 1,192 points.