Gulf may regain strength; bank earnings positive
DUBAI, July 9 (Reuters) – Gulf stock markets, which have drifted down for several days, may regain strength on Thursday after the global market environment improved and several banks in the region reported positive second-quarter earnings.
Brent crude oil is up 1.5 percent in Asian trade near $58 a barrel and MSCI’s broadest index of Asia-Pacific shares outside Japan is 1.9 percent higher.
Just as importantly, initial bank earnings in the region have mostly been encouraging. Qatar National Bank, the largest lender in the Gulf Arab region, posted a 10 percent rise in quarterly net profit to 2.91 billion riyals ($799.2 million); analysts polled by Reuters had on average forecast 2.81 billion riyals.
Saudi Hollandi Bank, Banque Saudi Fransi and Al Rajhi Bank also beat estimates and Saudi Fransi raised its first-half dividend, though Al Rajhi halved its dividend.
The better global environment could also encourage cautious buying-back in Egypt, where the stock index tumbled 2.6 percent on Wednesday to a 15-month low, bringing its losses from February’s multi-year peak to 25 percent.
The market is beset by economic and security worries but valuations, which were over 10 percent above emerging markets as a whole at one stage, are now close to them; the index is at about 13.5 times trailing earnings, Thomson Reuters data shows, against around 13.3 for the MSCI emerging market index .
(Reporting by Andrew Torchia; Editing by Biju Dwarakanath)