Most Middle East stock markets became more stable on Monday, after plunging in previous days, as the price of oil recovered slightly. But fund managers said it was by no means clear that any sustained recovery of stock prices was starting. Brent crude climbed above $62 per barrel, after hitting 5-1/2-year lows of $60.28 earlier, as traders began pricing in expectations of improving global manufacturing data to be published later this week.
-- Mood of panic eases
-- But UAE bourses give up intra-day gains
-- Qatar's Barwa Real Estate surges after fresh order
-- Sustained rebounds for markets look unlikely
-- Investors may wait for state budgets, Q4 results
Dubai's stock index inched up 0.1 percent as most shares in the emirate gained. The market rose as much as 4.8 percent during the day before giving up almost all those gains by the end of the session. The Dubai index had tumbled 14.4 percent in the two previous sessions as oil's plunge triggered panic selling. With the outlook for oil still uncertain, very few people are willing to call a bottom for Gulf stock markets.
"It's just a normal technical rebound, there's nothing more at this stage," Sebastien Henin, head of asset management at The National Investor in Abu Dhabi, said of Monday's equity market trading. "It is not a game changer." Abu Dhabi and Oman also gave up all their intra-day gains and closed down 0.7 percent and 0.9 percent respectively. Renaissance Services, which provides services to the oil and gas sector, was the biggest loser in Muscat, tumbling 8.8 percent.
Gulf bourses have been closely correlated with oil prices for the last few weeks as investors became worried that a sharp decline in oil revenues could trigger large government spending cuts and thus slow non-oil growth. Analysts and fund managers believe this is unlikely to happen in countries other than Oman and Bahrain, since the big Gulf economies have huge fiscal reserves. But stock markets may remain under pressure from retail investor selling until there is clear evidence that government spending and corporate profit growth is staying strong.
QATAR, SAUDI Qatar's market was the most upbeat and jumped 3.1 percent on Monday as all traded stocks rose. Shares in Barwa Real Estate surged 5.4 percent after the firm won a 750 million riyal ($206 million) contract from a government company to build and operate low cost-warehouses.
Qatar is expected to maintain strong economic growth and a fiscal surplus next year despite oil's plunge, the government said on Sunday. Saudi Arabia's benchmark, on the other hand, underperformed the region and dropped 2.6 percent as an initial recovery gave way to a fresh sell-off across the board. The market's year-to-date gains, which peaked at 30.6 percent in September, have now turned into a 7.4 percent loss.
Analysts say many Gulf investors may continue selling into any strength for a while. "Upcoming catalysts which will help determine the direction of markets will be the 2014 results, along with the announcement of the Saudi budget for 2015," Sherif El Haddad, manager of the EFG-Hermes Middle East and Developing Africa Fund, said in a monthly report on Monday. Saudi Arabia is expected to announce its budget near the end of this month, and possibly next Monday.
"Looking ahead, we suspect that the big falls in equities have probably now happened," Jason Tuvey, London-based Middle East economist with Capital Economics, said in a note on the Gulf. "But if oil prices settle at $60-65 per barrel over the coming years, as we expect, a sharp rebound in stock markets across the Gulf seems unlikely."
DUBAI: The index inched up 0.1 percent to 3,325 points.
ABU DHABI: The index edged down 0.7 percent to 4,181 points.
SAUDI ARABIA: The index fell 2.6 percent to 7,905 points.
EGYPT: The index rose 1.3 percent to 8,832 points.
QATAR: The index jumped 3.1 percent to 11,460 points.
OMAN: The index fell 0.9 percent to 5,572 points.
KUWAIT: The index edged up 0.4 percent to 6,302 points.
BAHRAIN: The index lost 0.3 percent to 1,378 points.
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