Markets in Saudi Arabia and the United Arab Emirates rebounded on Monday as some investors bought back stocks at lower prices following a broad sell-off a day earlier, but Egypt extended declines to hit a new 23-month low. Saudi Arabia's benchmark had tumbled to a 35-month low on Sunday and Dubai's close was its lowest since last December following an 8 percent decline in crude benchmarks the previous week that deepened a prolonged oil price rout.
Gulf investors seem to have belatedly realised that the consequent hit to state finances would also impact listed companies' earnings, especially as most bluechips are at least partly government-owned, but a slight rebound in oil prices then convinced some to buy back regional equities. "For long-term investors and stock pickers, markets have started throwing up interesting investment opportunities," said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.
Dubai's index rose 0.9 percent. Contractor Arabtec jumped 8.4 percent, although it remains 84 percent below a May 2014 peak. The firm's chairman said on Monday it had proposed building 13,000 homes in Egypt. Abu Dhabi's index rose 1 percent. Aldar Properties, which has reported higher profits in nine of the past 10 quarters, was the main support with a 3.3 percent gain.
"I think it's a bit of a dead cat bounce; the fundamentals haven't improved from yesterday but people just felt the drop was too steep," said Sanyalaksna Manibhandu, head of research at NBAD Securities. "It's a temporary relief. If anything negative happens by tomorrow morning, we could see more selling." The Saudi benchmark rose 1.1 percent to trim its 2015 losses to 16.5 percent.
Manibhandu said the trigger for the recent drop in Gulf markets was Standard & Poor's downgrade of its ratings on Saudi Arabian sovereign debt on October 30 and Fitch Ratings' revision the following week of its outlook for three Saudi banks to negative. "There's a lot of concern the agencies will now turn to other Gulf countries including the UAE," added Manibhandu. Heavyweights Saudi Basic Industries Corp (SABIC) and National Commercial Bank rose 3.3 and 1.5 percent respectively. Egypt's benchmark fell 0.6 percent to its lowest close since December 2013 despite gainers outnumbering losers 19 to eight. Commercial International Bank, the Cairo bourse's largest listed company with a market value three times that of its nearest rival, fell 2.8 percent.
Comments
Comments are closed.