Middle East markets will look to both Europe and the region this week as the euro-zone crisis and the release of third-quarter earnings closer to home set the trading pace.
Italy's Senate on Friday approved austerity measures in an attempt to appease investors and pave the way for a new government following the expected departure of the prime minister Silvio Berlusconi. How effective those moves are perceived by investors will become apparent tomorrow when European markets re-open.
"They are putting Band-Aids on the problem, but not really tackling the root cause," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "It's a good first step, however more action needs to be done by policymakers to convince investors that the euro zone is taking its debt crisis seriously."
Italian bond yields, which raced way above sustainable levels last week, triggered a roller-coaster ride for global and regional stock-markets. The Egyptian Exchange, the only bourse in the region classified as an emerging market, declined 1.4 per cent to 4383.49 points last week.
The second-largest bourse in the region is expected to see a flurry of trading activity as companies release third-quarter results, providing an indication of whether a recovery is in place following the civil uprising that ousted Hosni Mubarak as president. Some stocks may face pressure as court cases unfold.
Egypt's annual consumer price inflation hit a four-year low last month, at 7.1 per cent year-on-year, down from 8.2 per cent in September. Rising living costs were seen as one trigger for the country's popular uprising.
"There are way too many unknowns at the moment," Mr Khokhar said. "Egypt is a market that has a lot of potential but that won't be unlocked until a year or so."
Ghabbour Auto, the Middle East's largest vehicle maker, is expected to release weak third-quarter results today as dwindling tourist numbers require far fewer buses, according to CI Capital, based in Cairo. The investment bank has a "hold" rating on the stock.
Telecom Egypt, the country's monopoly fixed-line telephone company, will report earnings tomorrow. The company was hit by a two-week strike last month even after it said it would give employees a bonus before Eid.
Remco for Touristic Villages Construction, the third-biggest publicly traded resorts company in Egypt, on Tuesday will attend a court case hearing related to the annulment of its North Coast land contract.
Orascom Development Holding will release quarterly results on Wednesday. The resort company run by the billionaire Samih Sawiris last week lowered its guidance for the full-year margin on earnings before interest, taxes, depreciation and amortisation to between 2 per cent and 4 per cent as hotel occupancy declined.
A court case to challenge the annulment of the department store Omar Effendi by a Saudi investor resumes on Wednesday. Omar Effendi was sold to Nawal, a Saudi Arabian company, for 589.5 million Egyptian pounds in 2006. The sale, by the Mubarak government, drew great scrutiny because of the brand's popularity. The retail chain was founded more than 150 years ago.
Elsewhere in the region, the Dubai Financial Market General Index opened at 1369.74 points on Wednesday and rose to a high of 1391.72 before closing at 1382.72 on Thursday. The Abu Dhabi Securities Exchange General Index opened at 2480.78 before reaching a high of 2483.29 on Wednesday and closing at 2477.84 on Thursday. Qatar's index was little changed at 8697.58 and Bahrain's measure lost 0.4 per cent to 1154.20. Markets in Saudi Arabia, Oman and Kuwait were closed for Eid.