GCC markets closed mixed yesterday, the first trading day of 2009 for most of the bourses, after they lost more than 50 per cent last year. Nervous investors are likely to take a cue from fourth-quarter earnings after last year's sharp share price fall amid a global financial crisis.
In Saudi Arabia, the market recovered from intraday losses to end up 0.5 per cent at 5,048.31 points in a volatile but range bound trading session. The market rose 4.6 per cent on Saturday, this year's first trading session.
Some bargain buying is being seen in the Saudi market ahead of fourth-quarter results but many traders are unsure if the market will hold on to these gains.
"The index remains stuck between the support of 4,223 and the resistance of 5,000-5,350," said BMG Financial in a note.
"The trend is shifting from down to flat. A climb to 4,900 or 5,350 is a selling opportunity. A close above 5,350 points triggers an entry signal," the note added.
However, investors in the Saudi market have been reassured by the government's commitment to maintain spending despite weakening oil prices. The Saudi Government is planning to spend a record SR225 billion (Dh220bn) this year on infrastructure and other strategic industrial projects and risk running a deficit in order to prop up growth.
Kuwait Stock Exchange retreated 2.2 per cent to 7,610.50 points, its lowest since March 2005. Banks led the losers as the National Bank of Kuwait closed with almost limit down of 8.5 per cent to KWD1.080. Bellwether Zain declined six per cent to KWD0.790. Market volumes are sharply lower.
"The market is directionless. There is just no incentive to enter it with many investors either waiting for fourth-quarter earnings and/or a state fund to start buying," said a Kuwait-based institutional trader.
A multi-billion-dollar government fund was expected to start buying into the market last week but its absence had triggered a six-session share-price slide. "The fund is expected to enter the market this month, likely after some blue chip firms report their full-year earnings," the trader added.
In Qatar, Doha Securities Market closed 0.7 per cent higher at 6,935.79 points. The measure advanced to its highest since November 10. Banks and industrials led the gainers. The market was last year's best GCC performer, down about 28 per cent. The government's move to shore up the country's banks is also being viewed positively after the Qatar Investment Authority said earlier it would start buying shares of national banks in 2009, taking a 10 per cent stake initially. This comes after the government said in October 2008, that QIA would take a stake between 10-20 per cent in national banks in a bid to boost their capital.
Omani shares advanced for a third session as oil capped its biggest weekly gain since 1986 and stocks in Oman were about two-thirds cheaper than a year ago.
Bank Muscat, Oman's largest lender by market value, rose to its highest in more than two weeks to 0.87 Omani rial. National Bank of Oman advanced after raising funds through a private placement. The stock climbed three per cent to 0.376 Omani rial, bringing a three-day rally to 16 per cent.
Muscat Securities Market 30 Index climbed 4.91 per cent to 5,708.25 on its first trading day of the year. The measure tumbled 40 per cent in 2008.
"Retail investors are encouraged by the strong gains in international markets and as oil seems on the way to recovery," said Adel Waleed Nasr, local brokerage manager at United Securities. "Valuations are excellent and some companies are expected to retain growth of about 20 per cent this year."
Valuations are likely to drive trading sentiment in 2009 after GCC market investors lost about $535 billion last year.
Fourth quarter earnings, which are due in the next few weeks, may give investors a better indication of how the region is coping with the current economic climate.