Masah Capital Report: Regional markets range bound like oil but bargain buying picks up

Last week ended with oil prices in the USD 51-53 range and MENA markets maintaining a cautious stance. The week pattern which showed up in most markets, indicated weak trading activity that gave way to buying as bargain hunters stepped in, reports the Al Masah Capital Limited.
Saudi Arabia had a strong close to the week, with the country’s original sovereign bond issuance’s success which led to a positive investor sentiment. The strong subscription in the bond (over USD 15 billion) gave investors hope that the country’s economy contraction and ballooning deficit could have a silver lining.
Egypt also had a strong close for the week however it is still trading in a tight range with resistance at the 8,400 level, with investors continuing to wait for the country’s currency devaluation which is considered the first crucial step to accelerate the IMF loan and alleviate pressure on the economy.
Despite the strong close, most of the MENA indices on average had a negative week. Egypt led the losers followed by Abu Dhabi and Saudi, each going down for the week by 2.68%, 1.2% and 0.74% respectively, while Qatar and Dubai markets showed a modestly positive week with each going up by 0.47% and 0.17% respectively.
October returns sit on average at negative 0.8% meaning the coming last week of the month will most likely determine if we end up with a positive or negative month. Egypt and Saudi have driven the buying this month so trading activity there could show the trend we end up with while UAE has taken the brunt of the selling and could worsen the average monthly returns. In any case, 2016 returns are around the breakeven mark, so just like October, how we end up for the year could be determined in the next few weeks.

Dubai Gazette