MIDEAST STOCKS-Oil’s leap may boost Gulf, Egypt’s mood still bullish – Reuters

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DUBAI, March 17 A leap of oil prices may boost
Gulf stock markets on Thursday, while Egypt may remain firm on
positive sentiment after this week’s currency devaluation,
despite a looming interest rate hike.

Brent crude has risen about 6 percent to above $40 a barrel
since Wednesday afternoon, when Qatar said oil producers would
meet in Doha on April 17 to discuss a proposal to freeze output.

Most Gulf stock markets closed on Wednesday before most of
oil’s rally took place, although the Saudi bourse reacted to
part of the rally.

Abu Dhabi’s index dropped 1.3 percent on Wednesday
because of weak banking stocks, but at least two major blue
chips may boost it on Thursday.

International index compiler FTSE Russell will add Etisalat
to its All-World and other indexes after the close of
business this week; EFG Hermes estimated earlier this month that
this could attract about $216 million of passive fund inflows
into the stock. The bulk of such inflows usually occurs on the
final day before an index change takes effect.

Also, Abu Dhabi’s Aldar Properties said late on
Wednesday that it would introduce a new formula to calculate its
dividends from 2016 onwards, which could lead to higher payouts
for shareholders. The new policy is based on the underlying cash
flow performance of the business.

Egypt’s index has already gained 10 percent in the
three days since the country’s currency devaluation on hopes
that it would attract foreign money into the country.

So far, foreign inflows have been small, and an interest
rate hike of between 50 and 100 basis points is expected at a
central bank meeting on Thursday.

Nevertheless, local investor sentiment is heavily bullish,
with local analysts focused on the possibility of higher
interest rates drawing more funds on the country. So heavy
profit-taking in the stock market may not occur for now.

Mohamad al-Hajj, of the research department at EFG-Hermes,
said Egypt’s market was still attractively valued at about eight
times estimated 2016 earnings against roughly 12 times for the
Middle East and emerging markets.

Late on Wednesday the central bank sold dollars to banks at
8.78 Egyptian pounds per dollar, a slightly stronger rate for
the pound. This may ease concern, for now at least, that this
week’s devaluation could be followed by further currency

On Wednesday the index, which closed at 7,229 points,
confirmed a break of technical resistance at this year’s peak of
7,114 points, leaving its next barrier as the October peaks
around 7,700 pounds.

(Additional reporting by Celine Aswad)

MIDEAST STOCKS-Oil’s leap may boost Gulf, Egypt’s mood still bullish – Reuters}