DUBAI, March 16 Most stock markets in the Gulf
rose in early trade on Thursday after the U.S. Federal Reserve
hiked interest rates as expected but signalled no acceleration
in the pace of monetary tightening.
However, the Gulf lagged other emerging markets around the
world because of concern that low oil prices and government
austerity measures will continue to weigh on corporate earnings.
Among planned austerity steps, the six-nation Gulf Cooperation
Council plans to introduce a 5 percent value-added tax in 2018.
The Saudi stock index rose 0.8 percent in its first
20 minutes of trade, while Dubai was up 1.3 percent and
Qatar added 1.0 percent. MSCI's emerging market index
climbed 1.7 percent.
Saudi banks were strong and construction firm Khodari
rose 1.6 percent in unusually heavy trade, after
jumping 7.1 percent on Wednesday.
In Dubai, GFH Financial gained 1.9 percent and
Shuaa Capital added 2.7 percent. GFH confirmed earlier
this week that the two firms were in talks to merge and after a
week of silence, Shuaa issued a brief statement early on
Thursday saying preliminary discussions were taking place but no
decision had been reached.
Qatar was buoyed by a 1.7 percent rise in Qatar Industries
, although Qatar Navigation sank 3.6 percent
as it went ex-dividend.
Abu Dhabi's index was flat, restrained by Abu Dhabi
Commercial Bank, which fell 2.4 percent as it went
The central banks of Saudi Arabia, the United Arab Emirates,
Kuwait and Bahrain raised official interest rates by 0.25
percentage point in response to the U.S. hike, but market rates
in the Gulf will not necessarily rise because a partial rebound
of oil prices and governments' international bond issues have
eased pressure on state spending.
Commercial bankers said it was not clear on Thursday morning
whether Qatar's central bank would choose to imitate the U.S.
hike. Central bank officials were not available to comment.
(Reporting by Andrew Torchia; Editing by Toby Chopra)