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Gulf markets seen steady but summer may dampen appetite

Published: Updated:

Gulf bourses are likely to steady on Sunday after selling pressure late last week, as bullish regional confidence is offset by expected weakness from summer trading.

Saudi Arabia’s bourse closed flat on Saturday, bucking a global sell-off and a $2 per barrel drop in Brent crude triggered by the U.S. Federal Reserve plans to start cutting back its bond-buying stimulus this year.

U.S. equities stabilized in choppy trading on Friday.

“There are no positive catalysts for the markets to go higher,” says a Dubai-based trader who asked not to be identified. “Crude prices are weak and the holiday season is around the corner. Activity this week will be more reactive than based on conviction.”

Regional markets retreated on Thursday, with Dubai’s benchmark and Qatar’s index losing 1.4 and 1 percent respectively. Dubai is still up 45.5 percent this year.

Local markets will likely trade sideways until second-quarter earnings, the trader adds. Saudi Arabia kicks off earnings season in mid-July, while UAE companies will mostly report from early August onwards.

Long-term investors however are confident strong economic growth and large budget surpluses for Gulf countries will help them overcome any weakness in global equities.

Saudi Arabia’s Riyad Bank will be in focus after saying it will distribute first-half dividends of 975m riyals ($260m) or 0.65 riyals a share.

A sharp growth in bank lending in May is likely to buoy sentiment in the sector ahead of second-quarter earnings.

Lending to the private sector rose 16.5 percent during the month, the fastest clip since February 2009, after a 16.0 percent increase in the previous month.

Elsewhere, Kuwait will hold its sixth parliamentary election in seven years on July 25, a snap vote ordered by its top court after the current assembly was dissolved earlier this week in another sign of political turmoil in the Gulf Arab state.

Kuwait Projects Co (KIPCO), the country’[s largest investment company by assets, said on Saturday it had hired financial group Rothschild to advise on an initial public offering of its pay-TV company OSN.

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