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Gulf markets catch breath, fresh declines seen

Dubai, February 1, 2011

Gulf markets saw a brief respite on Tuesday from selling pressure sparked by Egypt's political turmoil but the reprieve is expected to be short-lived, say analysts.

Regional benchmarks have tumbled this week following unrest in the North African state that has left at least 140 people dead.

More than 200,000 Egyptians poured into Tahrir Square in Cairo, hoping to bring an end to 30 years of President Hosni Mubarak's authoritarian rule.

Markets in the UAE rose on Tuesday after being mauled in previous sessions, but traders offer little hope for a convincing rally.

'Investors are still very tense in their investment decisions and affected by the developments in Egypt,' said Mohammed Yasin, CAPM Investment chief investment officer.

'The fact our markets rebounded less than the drops earlier in the week hints that buyers are still not fully in and are booking profits (occurs) with every market-positive movement.'

Dubai's index rose 0.6 per cent to 1,544 points, rallying from Monday's 21-week low, but volumes slumped to an 11-day low and were barely a fifth of Sunday's total, indicating little buying interest.

Emaar Properties climbed 1.6 per cent to 1,544 points, easing away from Monday's 33-week low, while telecoms operator Du added 2.7 per cent.

'Egypt caused the fall in UAE markets, but stocks were already weak and don't look like they can sustain any uptrend,' said Musa Haddad, head of Mena equity desk at National Bank of Abu Dhabi.

'I would wait to see if Dubai can end the week above 1,600. If this happens, it can recover, otherwise there will be further downside. We are below short- and long-term moving averages.'

On the Nasdaq Dubai bourse, DP World slumped to a six-week low on Tuesday after the Dubai ports operator stopped operations in Egypt, but it is not expected to have an impact on earnings.

DP World fell 4.1 per cent to its lowest close since December 21 after it suspended activity at its Sokhna port.

'The Sokhna project doesn't contribute significantly to consolidated revenues and halting operations won't have an impact on my estimates for DP World for 2011 - it manages 50 ports across the world,' said Kareem Murad, a Shuaa Capital analyst in Dubai.

In Abu Dhabi, Dana Gas dropped 1.6 per cent after saying it would evacuate foreign staff if the political crisis in Cairo deepened. On Monday, the firm reported above-forecast fourth-quarter profit.

National Bank of Kuwait (NBK) dropped 2.8 per cent to a five-week low after the lender's fourth-quarter profit rose 20 per cent, but fell short of analysts' estimates.

Saudi Basic Industries Corp (Sabic) and Saudi Arabian Fertilizers Company (Safco) were up 1.5 and 0.9 percent respectively at 1138 GMT as petrochemical stocks led Saudi Arabia's index higher.

'Volumes are strong and show this really is a $1 billion a day market and has the depth and breadth to absorb sustained selling pressure, which is giving people confidence,' said a Riyadh-based trader who asked not to be identified.
 
'Volumes are coming in to meet the selling pressure and this is without any buying by state support funds like in Kuwait.'

Saudi volumes hit a eight-month high on Saturday and although they subsequently declined, Monday's trade was 43 percent above the one-year daily average.-Reuters




Tags: Gulf Markets | Egypt political turmoil |

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