Gulf bourses are in for another rocky week with euro zone debt troubles shaking investor confidence in riskier assets like equities, and Saudi Arabia’s declines in the previous session giving a weak lead.
Saudi Arabia’s bourse fell 0.7 percent to 7,014 points on Saturday, taking its May losses to 7.2 percent.
Dubai’s index has dropped 9.3 percent so far this month and Abu Dhabi’s benchmark has fallen 1.6 percent. Trading volumes have thinned out on growing worries that Greece will exit the euro bloc.
“Our markets are driven by retail investor sentiment and they will only look at momentum trading,” says Ali Adou, portfolio manager at The National Investor.
“The UAE economy is sound and that’s why the downside is attractive to institutional investors. But those will not come in until there is clarity on the euro zone.”
Stocks in the US and the euro slipped on Friday as Spain’s deteriorating finances and a possible Greek exit from the euro overshadowed an upbeat report on US consumer confidence.
Elsewhere, Qatar’s bourse, traditionally a more resilient market to global sentiment due to strong economic growth outlook, is also struggling to make gains. The index is down 2.8 percent so far in May.
“Over the short-term, as we are in a downtrend, we are reaching over-sold areas and crossing those areas upwards, but momentum is weak suggesting a bounce rather a change in trends,” says a Doha-based trader who asked not to be identified.
In Oman, Renaissance Services will be in focus after its unit Topaz Energy and Marine signed the first phase of a US$330m refinancing loan agreement with banks.
Oil prices rose for a second day on Friday on the lack of progress in negotiations with Iran over its disputed nuclear programme, but crude futures posted a fourth straight weekly loss as Europe’s debt problems threatened economic growth and petroleum demand, said Steve Drake, PricewaterhouseCooper’s head of capital markets Middle East.
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