Gulf bourses disappointed by G-20 meeting; Egypt continues to rally

Gulf bourses were mixed Sunday with the UAE’s two markets hitting new multi-month lows as traders said the weekend’s Group of 20 meeting in Paris had failed to reduce uncertainty over the eurozone debt crisis and the outlook for the global economy.

Dubai’s benchmark fell 0.7 percent to its lowest close since March 7, when regional markets were tumbling in the early stages of the Arab Spring political turmoil. In Abu Dhabi, the benchmark slipped 0.3 percent to a 22-month low.

In their meeting Saturday, G-20 finance ministers and central bankers pressed Europe to act decisively on the debt crisis at an Oct. 23 EU summit.

European officials said they were making progress toward such a plan, which would include recapitalizing banks, but in the absence of a detailed, comprehensive announcement of measures, many Gulf investors were in no mood to return to stock markets. Turnover remained extremely low.

“If [Europe’s] plans don’t come up to scratch, you may see markets decline again,” said Mohammed Yasin, Dubai-based CAPM Investment’s chief investment officer.

Some traders said sentiment in Gulf markets was also dampened by the demonstrations against financial speculation and economic inequality in Europe and the United States at the weekend, although it was unclear whether the protests would have any lasting economic or political impact.

“There are a few distressed sellers, trying to get ahead of a potential decline in case the protests get more fiery,” said Jad Naja, equity trader at Rasmala Investment Bank.

“Volumes are very weak and a big reason for that is the uncertainty. Foreigners are more reluctant than ever to enter the market.”

The bright spot in the Middle East was Egypt, where the benchmark index gained 1.5 percent to 4,214 points, continuing a rally which traders believe is due to ultra-cheap valuations and the index’s approach last week to strong chart support at a multi-year low of 3,380 points. The index has risen for the past four days but is still down 41 percent on the year.

A smooth start to candidate registrations for the country’s legislative elections also encouraged investors, easing fears of political turmoil somewhat, traders said.

“The elections are going through smoothly, improving the political scene,” said Osama Mourad, CEO of Arab Finance Brokerage. He added that the government appeared to be preparing to challenge some court decisions reversing privatisations in the wake of Egypt’s revolution, which would be another positive signal to investors.

Egypt’s third biggest listed property developer, SODIC , jumped 7.6 percent after announcing it registered almost 570 million Egyptian pounds ($95.6 million) worth of sales this year to the end of September.