x Abu Dhabi, UAESaturday 22 July 2017

Euro's woes to steer Gulf markets

After a slow week, Gulf stock markets await for cues from Europe's headlines this week.

The outcome of the Greek debt talks can sway local markets. Hannelore Foerster / Bloomberg News
The outcome of the Greek debt talks can sway local markets. Hannelore Foerster / Bloomberg News

Gulf stock markets are expected to be guided by headlines from Europe after a week of subdued trading.

"Any updates on Greek debt talks in Europe can move the markets in either direction," said Marwan Shurrab, the chief trader at Gulfmena Investments in Dubai.

The IMF, the European Central Bank and the EU continue to consult with Greece on its efforts to secure the next tranche of funding that would help avert a default.

George Papandreou, the Greek prime minister, will meet Angela Merkel, the German chancellor, in Berlin on Tuesday.

World stock markets and commodities declined last week after the US Federal Reserve said the US economy, the world's biggest, faced "significant downside risks". The Federal Open Market Committee on Wednesday said the central bank would replace US$400 billion of short-term debt with longer term treasuries to spur growth.

In the UAE, the Abu Dhabi Securities Exchange General Index was down 0.5 per cent at 2,557.45 points for the week, while the Dubai Financial Market General Index declined 0.7 per cent to 1,460.29 in the same period.

"Volumes are very low," said Mohammed Ali Yasin, the chief investment officer at CAPM Investment in Abu Dhabi.

Stock valuations have reached historic lows for most countries in the Gulf, but there is a lack of appetite at the moment, Mr Yasin said.

As the third quarter comes to an end this week, trading might pick up as earnings reporting season begins in Saudi Arabia, said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi.

"There is a renewed focus on company fundamentals and dividend yields," Mr Khokhar said.

"In-house research highlights many GCC equities that yield over 6 per cent and yet on a fundamental basis offer capital appreciation potential in excess of 25 per cent on a two-year time horizon," he said.

In Egypt, investor focus will turn to the property sector as the ministry of housing starts the auction of 6,000 land plots today. On Thursday, the property developer Nasr City Housing & Development auctioned six land plots in Nasr City.

Also this week, several Egyptian listed companies are expected to pay out dividends.

Egyptian Electrical Cablesis to pay 0.025 Egyptian pounds per share tomorrow.

Al Ezz Dekheila Steel is to pay out 35 pounds per share on Wednesday.

Maridive, an oil and gas services company, is expected to pay its second instalment of 6 US cents a share on Thursday.

The stock of Citadel Capital may move today after the Egyptian private equity company announced on Thursday after the close of trading that it had signed a $234 million deal to fund a five-year project to improve transport links between Kenya and Uganda.

Citadel said it had invested in Rift Valley Railways, which has a 25-year concession to operate 2,352km of track.

Banking stocks may move this week after the government announced a reshuffle of the top executives of several of the country's state banks. Key positions at National Bank of Egypt and Banque Misr were unchanged, but other major institutions such as Egyptian Arab Land Bank and Banque du Caire were affected.

Traders saw the move as positive, said Wafik Dawood, the head of institutional trading at Mega Investment Securities in Cairo.

Egypt's benchmark, the EGX 30 Index, is down almost 40 per cent this year after the popular uprising that toppled Hosni Mubarak from the presidency in February.

High liquidity is helping Egypt's banks weather a tough year while the government has imposed restrictions on transfers abroad after the revolution to help protect the industry.

Elsewhere in the region, Kuwait's measure fell 1.4 per cent to finish last week at 5,916.20, Bahrain's dropped 1.5 per cent to 1,245.01, Oman's slipped 0.7 per cent to 5,699.29 and Qatar's advanced 0.1 per cent to 8,444.79.

The Saudi Tadawul All-Share Index declined 0.03 per cent to 6,142.26 yesterday.