Gulf stock markets may consolidate in low turnover
Stock markets in the Gulf may consolidate on Wednesday with firm oil prices providing support but the approach of third-quarter corporate earnings announcements keeping many investors on the sidelines.
Brent oil futures have risen 4.4 percent since Friday to above $51 a barrel. But third-quarter earnings in much of the Gulf look set to be weak because of low oil prices and governments’ austerity policies.
Although Riyadh’s general market index rebounded 2.0 percent on Tuesday, trading volume shrank, suggesting a sustained rally is not likely. The index is down 1.7 percent so far this month.
The weakness in the region’s largest market by value has dented sentiment in neighbouring bourses. Dubai’s stock index is down 2.0 percent this week; it turned technically bearish on Monday when it broke technical support on the August and September lows of 3,430-3,442 points, which became immediate resistance.
Analysts at NBAD Securities said most Dubai stocks were now below their 50-day moving averages and any recovery in the near term could only be sustained on higher trading volumes.
GFH Financial may attract some interest after Fitch Ratings raised the outlook for its debt to positive from stable, citing steps which GFH’s management have taken to strengthen the balance sheet by paying down debt, reshaping the business model with a focus on income-generating investments, and improvement – from a low base – of profitability.