MSCI said this month it would include MSCI Saudi Arabia in its emerging-markets index, effective from Tuesday's close, a move that could draw billions of dollars into the market.
Al-Etihad Cooperative Insurance 8170.SE rose 2.1% after the regulator lifted the ban on new vehicle insurance subscriptions.
Saudi Steel Pipes jumped 5.9%. It had surged 10% on Monday after saying its accumulated losses were reduced to zero as of December 2018.
The Qatari index rose 1.2% with blue-chip lender, Qatar National Bank, adding 1.8%.
Petrochemical maker Mesaieed Petrochemical Holding rose 2.9%. The stock has risen in most recent sessions after MSCI decided to include the stock in its emerging market index.
Qatar's stock exchange is developing two new Exchange Traded Funds, part of efforts by the Middle East's strongest performing stock market in 2018 to boost foreign investment, Reuters reported last week, citing CEO Rashid al-Mansoori.
Companies on Qatar's exchange in 2018 increased foreign ownership limits to 49%, most of which had previously been set at 25%, attracting a flood of cash that helped boost the main index by more than 20% last year.
"Now the minimum will be 49% for all Qatari companies ... this will attract more liquidity and more room for foreign investors to invest," said Mansoori.
In Dubai, the index was up 1.2%, led higher by real estate stocks. Major developer Emaar Properties traded 4.2% higher while its unit Emaar Malls closed 4.9% up in heavy trade.
The stock exchange data showed that native investors supported the rise while foreigners were the net sellers.
Arabtec Holding rose 4.8% after its unit Target Engineering won a construction contract for 192 million dirhams ($52.28 million).
Egypt's blue-chip index closed 0.5% higher with Alexandria Mineral Oils surging 6.8% after its board last week approved launching a study for the second phase of a heavy refining project to extract high economic-value products.
The Abu Dhabi index was also up 0.3%, with Dana Gas gaining 4.5.% and Abu Dhabi Commercial Bank climbing 3%.
($1 = 3.6728 UAE dirham)
(Reporting by Shakeel Ahmad in Bengaluru Editing by Mark Heinrich) ((firstname.lastname@example.org;))