MIDEAST STOCKS-Markets may firm on global trend; SABIC beats estimates
United Arab Emirates stock markets

DUBAI : Most Middle East stock markets may be firm on Sunday in line with a positive global trend, though currency depreciation worries may continue to dampen Egypt. Saudi Basic Industries Corp posted a third-quarter earnings drop but beat analysts’ estimates, which may support Saudi petchems.

Major world equity markets climbed to a two-month high on Friday while oil prices rose nearly 2 percent as traders covered short positions after four days of losses and the U.S. oil rig count fell for a seventh straight week.

That looks likely to encourage markets in the United Arab Emirates and other Gulf countries which were closed on Thursday for a holiday marking the Islamic New Year.

Dubai’s index, which last closed at 3,698 points, may retest technical resistance around 3,700 points, which has capped it since the start of September.

Saudi Arabia remained open on Thursday, when its index fell 1.1 percent following poor earnings from petrochemical producer Saudi Kayan.

It may gain some support on Sunday, however, after top petrochemical maker Saudi Basic Industries Corp (SABIC) beat estimates. SABIC reported a 9.4 percent drop in third-quarter net profit to 5.6 billion riyals ($1.49 billion), but analysts polled by Reuters had forecast on average 4.36 billion riyals.

Some investors are likely to remain wary of petchems, however, because of speculation – for which there is so far no clear evidence – that the Saudi government’s huge budget deficit will prompt it to raise money by lifting gas feedstock prices next year, which would hurt the industry’s bottom line.

Egypt’s stock market sank 1.0 percent on Thursday after the central bank allowed the Egyptian pound to weaken to 7.83 per dollar from 7.73, the first official depreciation since July. Investors think this could be the start of another period of managed depreciation.

That could deter fresh foreign buying of stocks for a while and hurt companies dependent on imports, though real estate shares, traditionally seen as a hedge against currency depreciation, might benefit.

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