Regional markets may extend gains on Monday as investors look for bargains after a sharp declines in recent sessions and a delay in a possible military strike on Syria lowers risk.
While momentum traders are likely to jump in, longer-term investors are awaiting more clarity of whether there will be a strike on Syria, the scale of military intervention and also for any reaction from Syria’s allies Iran and Russia. Bourses of Dubai and Saudi Arabia will be the most volatile in coming sessions due to heavy retail trading.
Arab states are urging the international community to take action against the Syrian government over a chemical gas attack that killed hundreds of civilians. But U.S. President Barack Obama has asked for a congressional vote on the matter and France may also go down the same route.
In Egypt, the army-backed authorities referred deposed President Mohamed Mursi to trial on Sunday on charges of inciting murder and violence, in an escalation of the crackdown on his Muslim Brotherhood.
This is likely to widen the gap between the polarised nation and reduces chances of a non-inclusive government when Egypt heads for parliamentary elections, as planned by the interim authorities.
Buying from the bottom however, is likely to support Cairo’s benchmark – the measure is down 3 percent year-to-date, underperforming its Gulf peers.
Many investors are also optimistic that given a calmer political backdrop, there are untapped opportunities in the market with prices at attractive levels.
In Dubai, shares of contractor Drake and Scull International may see a boost after the firm said it won a 415 million dirham ($112.99 million) contract from the main developers assigned to build a branch of France’s Louvre museum in Abu Dhabi.
Global cues are positive for the local equities: Asian shares climbed to a two-week high on Monday, and the Australian dollar and copper gained, as China said its manufacturing expanded in August at the fastest pace in more than a year.
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