Bargains seen in Gulf despite political tensions

Investors are likely to remain cautious over regional geo-political tensions, but a recent correction in the equity markets allowed room for bargain hunters. (File photo: Reuters)

Regional geo-political tensions are likely to keep investors cautious but a recent correction in the equity markets leaves room for bargain hunters, analysts say.

Trade durations across stock markets in the Gulf Cooperation Council, GCC, have shortened during the political uncertainty with retail investors driving intraday volatility.

Markets in UAE, Qatar and Saudi Arabia, all hitting multi-year peaks, were down around five percent each last week on risks of an attack on Syria and have since regained less than half of the lost ground.

“The sell-off created some extremely attractive entry points on many names, so bidders will likely drive the region a bit higher, especially as the Syrian issue moves further to the background,” says a Dubai-based analyst who asked not to be identified due to company policies.

President Barack Obama’s efforts to persuade the United States Congress to back his plan to attack Syria met with skepticism on Monday.

Lawmakers in his own Democratic Party expressed concern the U.S. would be dragged into a new Middle East conflict.

In a move called "prudent planning,” the USS Nimitz aircraft carrier and four other ships in its strike group moved into the Red Sea early on Monday.

A strike on Syria has been put to a congress vote and incase of support, will take place mid-September at the earliest. This leaves a few days for local investors to look for attractive opportunities.

Kuwait’s Warba Bank, set up with a capital of 100 million dinars ($351m), will be in focus on its exchange debut. No new shares have been issued for this secondary listing however.

In Egypt, a judicial panel set up by the military-backed government supported a legal challenge to the status of the Muslim Brotherhood.

This could compound the rift between the polarized nation and trigger further street violence.

The Brotherhood has plans for a new mass protest on Tuesday. Cairo’s benchmark has fallen 4 percent year-to-date, underperforming its Gulf peers and weighed under by a political crisis. Investors are struggling to take a longer-term position in the market until there is political and macroeconomic clarity.

Elsewhere, positive global cues might entice Gulf investors to increase risk. Upbeat factory data from around the globe powered Asian markets on Tuesday, while gold and the yen lost some of their safe-haven appeal as the U.S. delayed a possible strike on Syria.

Brent futures edged lower but held above $114 a barrel.

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Last Update: Wednesday, 20 May 2020 KSA 09:41 - GMT 06:41
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