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04 March 2024

Gulf markets volatile as investors eye Egypt

By Reuters

Middle East markets opened higher before some benchmarks gave back gains as the unrest convulsing Egypt spurred renewed selling in volatile trade.

"Egypt is at the centre of everybody's radar and the market is trying to find a level that makes sense for what is happening in Egypt and the ramifications for the region," said Tarik Lotfy, Arqaam Capital Head of Mena equities in Dubai.

Egypt's bourse will be closed for a fifth day on Tuesday, but Middle East markets have tumbled this week, with Saudi Arabia, Dubai, Abu Dhabi, Oman and Qatar all making their largest daily declines in at least eight months and although some stocks have since trimmed losses, more volatility is forecast.

Monday trading volumes were lower than a day earlier, but remained above the January average.

In Dubai, Emaar Properties dropped 1.9 per cent. The UAE's largest developer has nearly a fifth of its land bank in Egypt. Contractor Drake & Scull fell 1.5 per cent and builder Arabtec slid 1.2 per cent. Both are active in Egypt.

Dubai's index fell 0.6 per cent to a 21-week low, taking its losses to 4.9 per cent in two sessions.
"When you get a down day like yesterday, invariably some people will come in for some bottom fishing, which is what happened at the open, but most investors are cautious, so there wasn't much follow through," added Arqaam's Lotfy.

Saudi Arabia's bourse, the largest in the Gulf Arab region, was under renewed selling pressure, giving back early gains to leave the kingdom's index down 5.3 per cent this week as of 1113 GMT as rising oil prices did little to bolster sentiment in the world's top crude exporter.

"Markets don't like uncertainty and therefore I don't see long-term money coming back despite compelling valuations," said Shakeel Sarwar, head of asset management at Securities & Investment Co. (Sico) in Bahrain.
Abu Dhabi and Oman rose 1 and 1.6 per cent, but confidence remains fragile.

"If things turn nasty (in Egypt) then foreigners will accelerate their selling in the region," said Adel Nasr, United Securities brokerage manager in Muscat.

Kuwait's index climbed 0.6 per cent, clawing back some of Sunday's 1.8 per cent drop.

Unrest is unlikely to spread to the Gulf, said Naser Al-Nafisi, general manager for Al Joman Center for Economic Consultancy in Kuwait.

"The political situation in Kuwait and the rest of the Gulf, is quite different to that in Egypt," he said. "Egypt is a republic yet Mubarak has been acting like a ruling family for 30 years, whereas in the Gulf the royal families will continue to govern and we accept that."

Government funds have been buyers on Kuwait's market this week, Nafisi added, helping to limit losses.
Zain rose 2.8 per cent after Kingdom Holding bid for the Kuwait operator's Saudi assets, paving the way for Abu Dhabi's etisalat to complete a takeover of Zain.

"Concerns about the possible closure of the Suez Canal, an important "chokepoint" for global trade, are contributing to the upward pressure on prices," Nomura wrote in a research note.

The bank estimates 8 per cent of global trade flows through the canal, including about 1 million barrels per day of oil products.