Saudi Arabia’s small and mid-cap stocks drove the market to a fresh 15-week high yesterday amid optimism over further policy action by the US Federal Reserve, but most other Gulf bourses slipped on profit-taking following recent gains.

The kingdom’s index rose 0.5 percent to its highest finish since May 13. Major real estate developer Dar Al Arkan climbed 0.5 percent, Nama Chemicals jumped 5.5 percent and Alinma Bank added 0.4 percent.

Insurance stocks, a favourite of local retail investors, rallied with the sector’s index advancing 1.0 percent. “Typically small-cap names moving up is indicative of retail coming back i.e. risk is back on, according to them,” said Rakan Himadeh, equity portfolio manager at Al Mal Capital. “The perception they have is that stimulus measures are close.”

Central bankers and economists at the annual US Jackson Hole meeting later this week are expected to discuss the possibility of strong policy easing by the Federal Reserve. Meanwhile, central bank sources told Reuters on Friday that the European Central Bank was considering setting yield band targets for its bond-buying programme to shield its strategy from speculators; the decision would not be made before its Sept. 6 policy meeting.

In the United Arab Emirates, however, Dubai’s bourse declined for a second session from Thursday’s 16-week high, as short-term technical cues – a negative 14-day momentum divergence at the recent peak – pushed investors to sell. The index dropped 0.9 percent.

Drake and Scull shed 2.1 percent to 0.89 dirhams a share. SICO Investment Bank cut the construction and engineering firm’s price target to 0.98 dirhams from 1.15 dirhams. Bellwether Emaar Properties and Air Arabia declined 1.2 and 1.1 percent respectively.

Abu Dhabi’s measure ended 0.4 percent lower, easing from Sunday’s five-month high. Stocks that are usually targeted by retail investors were the main drag on the index. Aldar Properties and Sorouh Real Estate shed 1.6 and 1.8 percent respectively. Dana Gas fell 2.6 percent.

“We are seeing a shift in liquidity from Dubai to Abu Dhabi, with mild (downward) pressure on property stocks,” said Firass Yaish, head of business development at Trust Capital. “Investors are trying to adjust their portfolios to create the most profit, and this time of the year is good to reshuffle the cards.”

In Qatar, the index declined 0.1 percent from Sunday’s 15-week closing high. Some technical analysts expect a correction in the index towards 8,360 points, near where it peaked in mid-July. Masraf Al Rayan dipped 0.6 percent and Barwa Real Estate shed 0.9 percent. Losers outnumbered gainers nine to seven.

Elsewhere, Kuwait’s benchmark climbed 0.4 percent, posting its seventh gain in the last eight sessions. The market however is recovering from an eight-year low it hit on Aug. 12 amid a worsening political and constitutional crisis.

National Industries Group added 1 percent. The firm, which filed a fraud suit against Carlyle in 2009 in Kuwait, has sought approval from a Delaware court to move the case to Kuwait, saying the US firm did not have a securities licence to offer investment products in the Gulf state.

MONDAY’S HIGHLIGHTS
SAUDI ARABIA
The benchmark gained 0.5 percent to 7,138 points.
DUBAI
The index fell 0.9 percent to 1,559 points.
ABU DHABI
The benchmark slipped 0.4 percent to 2,590 points.
QATAR
The index shed 0.1 percent to 8,498 points.
KUWAIT
The measure advanced 0.4 percent to 5,787 points.
OMAN
The measure eased 0.4 percent to 5,515 points.
BAHRAIN
The measure slipped 0.5 percent to 1,072 points.