Markets to consolidate, global cues weak
Egyptian Exchange - YOUM7

DUBAI: Middle East stock markets look set for another day of consolidation in narrow ranges and modest volumes on Monday with few positive domestic catalysts and global equities and oil prices soft.

MSCI’s broadest index of Asia-Pacific shares outside Japan is down 0.7 percent because of instability in Chinese stocks, while Brent crude has edged down further to $44.74 a barrel.

Many Gulf markets as well as Egypt’s bourse have established minor technical support in recent days, but there appears to be little appetite for an extended rebound.

A monthly Reuters survey of Middle East fund managers, published on Monday, found them on balance slightly more positive towards regional equities after valuations in some markets, though not Saudi Arabia, fell. However, they are far from being generally bullish.

Index compiler MSCI will add United Arab Emirates telecommunications operator Etisalat and Qatar Gas Transport Co (Nakilat) to its emerging markets index after the close on Monday, while Gulf International Services will be removed from that index and Bahrain’s Ahli United Bank will enter the frontier markets index.

However, movements in those stocks over recent days suggest the changes have already been factored in by investors and some passive funds have already moved, so there may be little further reaction.

Egypt’s index has risen in recent days on hopes that a new central bank governor may help to resolve the currency crisis.

However, the latest Reuters survey found 29 percent of managers expect to cut their allocations to Egyptian equities in the next three months and only 14 percent to increase them – the most bearish balance since the survey was launched in September 2013.

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