Comments
Gulf stock markets may remain depressed on Thursday after Brent oil prices dropped below $63 per barrel, but passive funds tracking MSCI’s emerging markets index may lift a handful of local stocks which were upgraded in the benchmark review.
Oil prices fell by up to 3 per cent for a second straight day on Wednesday as a resurgent US dollar weighed on the market amid concern that US crude supplies may have started rising again after three weeks of draws.
On Thursday, Brent crude has turned around but has edged up just 0.9 per cent.
In the absence of major corporate news or other local developments, Gulf retail investors usually take cues from the oil market and with the commodity heading for a second straight weekly decline, their sentiment may be negative.
Dubai’s market is particularly vulnerable after its main index fell below technical support in the 4,000 point area, where the index had peaked in December and February.
But several stocks in the region may rise on foreign inflows as global emerging market funds reshuffle their allocations in line with MSCI index adjustments.
In a semi-annual review announced this month and taking effect on Sunday, MSCI added Dubai’s Emaar Malls, Doha-listed Qatar Insurance and Ezdan Holding to the emerging markets index for the first time.
It also increased the weightings of Abu Dhabi Commercial Bank and Doha Bank, while dropping Telecom Egypt from the index.
Passive funds usually replicate the benchmark and adjust their positions on the eve of index reviews taking effect, sometimes causing significant share price moves. Because that day falls on Sunday, when most markets outside West Asia will be closed, passive funds may start adjustments on Thursday.
Qatar’s bourse may remain under some pressure on concern that Doha might conceivably lose the right to host the 2022 soccer World Cup after the United States and Switzerland launched criminal probes against FIFA officials.
However, the Doha index came well off its lows on Wednesday in its initial reaction to the news, suggesting the impact has largely faded for now. The index dropped as much as 2.8 per cent to a one-month low of 12,067 points but eventually closed at 12,229 points, a 1.5 per cent decline.
On global markets, Asian shares have edged down, while the dollar scaled a 13-year peak against the yen as it rallied on expectations that the US Federal Reserve will raise interest rates this year.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.