Markets Preview: All eyes will be focused during the next few days on Dana Gas, whose US$1 billion sukuk matures on Wednesday.
Dana Gas sukuk on spotlight as traders look to earnings results
Markets return from a long weekend to a subdued start to the working week. Bourses are closed today to mark Eid Al Adha.
Many traders had closed position before the weekend to ensure they would not be caught out by any developments over the holidays.
All eyes will be focused during the next few days on Dana Gas, whose US$1 billion sukuk matures on Wednesday.
The company has been in discussions over an extension with its sukuk holders, Zawya Dow Jones reported last week.
Apart from this, investors are preparing for a week of strong earnings results, said Sachin Mohindra, a portfolio manager of InvestAD.
"From what we've seen so far from blue-chips, headline numbers might not look too positive on the surface, but the underlying businesses are improving, especially in the tourism, trade and logistics sectors, so the fourth-quarter results have the potential to be better," he said.
"Meanwhile, investors will be watching for news of the proposed merger between the capital's largest developers, Aldar Properties and Sorouh Real Estate. Transparency on the merger ratio, and the rationale for that ratio, is key for triggering investor interest."
Markets are expected to spend the week pondering whether the IMF's visit to Egypt will yield a full-blown rescue.
The return of the IMF's observer mission has sparked a small rally in Egyptian equities and fixed income - despite many investors sounding a cynical note after the fund's inconclusive visits in the past year and a half.
Egypt turned down a $3.2bn rescue package earlier this year, only to request a larger $4.8bn capital injection after elections took place.
The EGX30 index of Egyptian equities rose 1.6 per cent on Wednesday after the resumption of the IMF talks were announced, but economists are not holding their breath.
"There has been little appetite to implement tough subsidy reforms in the run up to parliamentary elections, as this is unlikely to constitute good political capital," said a report from Bank of America Merrill Lynch released last week.
With the euro zone still being viewed with wariness and the presidential election in the United States just a week away, local investors are still twitchy.
"Any global move to a 'risk-off' environment because of the euro-zone debt crisis, or nerves over the US 'fiscal cliff' following the presidential elections, would be detrimental to GCC markets," Mr Mohindra said. "Risk-off" refers to the predisposition of investors to reduce exposure.
But developed markets have proven buoyant recently, with the S&P 500 and the Stoxx 600 index of European equities not far from yearly highs.
Following the IMF's meetings in Tokyo this month, markets are betting that an end could be near for euro-zone austerity drives that have caused severe effects on deleveraging western economies and exacerbated recessionary movements.
A report from Goldman Sachs also pointed to a growing sense of the irrelevance of the European financial crisis' most unpopular policy response.
"The case for consolidation is clear: many developed countries still need to improve fiscal positions substantially to make their debt paths sustainable. But the risk is that this shift proceeds too early and too fast," the report said.
The US, United Kingdom and Japan were much more likely to benefit from a pro-growth strategy than the euro zone because their central banks have less room to act, Goldman's report added.
The UK registered its first quarter of economic growth this year on Thursday, on the back of a one-off boost from the 2012 London Olympics, as it grew at a rate of 1 per cent.
Oil markets were jittery last week, with Brent crude prices falling during seven of the past eight trading days.
"We still expect the price of a barrel of Brent to drop back to around $85 next year, despite threats of a complete halt to Iranian oil exports," analysts from Capital Economics said.
"Our forecast would also be well below the fair price of $100 suggested by Saudi officials, but this informal target has already shown itself to be ineffective either as a ceiling or a floor. And over the longer term, booming supply from unconventional sources should maintain the downwards pressure on oil prices even when the world economy picks up again."