03/08/2010
Middle East stocks seen advanced gains and oil prices rise
Middle East stocks are seen advancing on Tuesday as gains in international markets and rising oil prices bolster regional sentiment.
The Dow Jones industrial average rose 2 percent overnight, taking its gains to more than 10 percent in the past month, boosted by solid European bank earnings and U.S. manufacturing data, while oil broke above $80 for the first time since early May.
Middle East markets have lagged the global rally, with a correlation to world stocks stronger on the downside than the up as disappointing regional earnings and low trading volumes weigh heavy.
Yet this week's global gains could rouse regional investors.
"Short term traders will look to take advantage," says Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments.
"If we see an early rally that isn't supported by increased turnover it will show it's only an intraday rally and hasn't attracted institutional investors, which are looking for stability and long-term growth. We need to see a flow of interest from international investors to support the market."
Egypt's index fell 0.9 percent on Monday, ending an eight-session winning streak as Talaat Moustafa Group slid ahead of a crunch court ruling on its flagship Madinaty project.
"Foreign and Arab investors are net sellers as a result of the confusion happening from the legal system in Egypt especially regarding land ownership," says Osama Mourad of Arab Finance Brokerage.
An Egyptian court on Sunday postponed a ruling on the legality of a land sale struck by the housing ministry and Talaat Moustafa after a court-assigned body recommended that the court scrap the land contract. (Reuters).
