Investors search for signs of stability

Market Preview: Regional investors will be hoping for stability to return to the markets after the worst three weeks for stocks in two and a half years.

The Abu Dhabi Securities Exchange General Index last Sunday and Monday fell almost 35 points, then rose nearly 24 points on Tuesday, only to see that rebound chopped down by almost 14 points on WednesShow more

Regional investors will be hoping for stability to return to the markets after the worst three weeks for stocks in two-and-a-half years.

With the shock from the August 5 US credit rating downgrade behind them, investors will focus on signs that European policymakers may be able to contain the euro-zone debt crisis. The signs will come from a varying palette, including the quarterly releases of regional publicly listed companies, euro-zone data and a court hearing in the trial of Hosni Mubarak, Egypt's former president.

But getting to that stability may require the market finding a floor.

"Although these drops are making many names very attractive to invest in, no one likes to catch a falling knife," said Mohammed Ali Yasin, the chief investment officer at CAPM Investment in Abu Dhabi. "Investors will wait till the dust settles before coming back in the short-term."

Widespread investor panic put the stock markets from New York to Shanghai on a roller coaster ride last week, with steep losses followed by almost as steep gains in high volume trading. It was the busiest week for volume since October 2008. The Abu Dhabi Securities Exchange General Index last Sunday and Monday fell almost 35 points, then rose nearly 24 points on Tuesday, only to see that rebound chopped down by almost 14 points on Wednesday. The Dubai Financial Market General Index closed at 1464.00 points, down almost 2 per cent over the previous five trading sessions.

If a person didn't know what kind of investor they were, they found out this week, said Marwan Shurrab, the chief trader at Gulfmena Investments in Dubai. "As long as confidence in the global economy and government policymakers remains shaky, markets will be volatile," he said.

The coming week promises a bit more activity in terms of economic data from Europe, and closer to the region, business data and a court trial in Egypt that could shape investors' outlooks.

The euro-zone GDP figures for the second quarter are expected to be released on Tuesday. Analysts are expecting the data to show that economic growth in the region as a whole slowed sharply in the quarter and worse is probably to come.

"So far, the available data for the second-quarter GDP confirm that the economic slowdown has spread to the core," said research house Capital Economics in London. "And given the recent sharp falls in the survey-based measures of business activity and the financial market turmoil, the recover looks set to slow further in the third quarter."

Among the companies set to report quarterly results in Qatar are Qtel, also known as Qatar Telecom, with its fiscal second quarter report set for today. Doha Insurance and Qatar Fuel are also slated to report today. Qatar's benchmark lost almost 2 per cent for the week to close at 8107.47 points.

Telecom Egypt is on tap for its second-quarter results tomorrow. The company's shares have been hammered by Egypt's popular uprising and worries about the global economy. They fell about 6 per cent last week to 14.80 Egyptian pounds on Thursday, their lowest weekly drop since the ousting of Mr Mubarak.

Egypt's court is slated to reconvene its hearing of Mr Mubarak's trial tomorrow. He faces charges of embezzling funds and ordering the killing of protesters before his removal in February. He could face the death penalty. Also on trial are his sons Alaa and Gamal and Habib El Adly, the former interior minister.

The trial comes as Egypt is struggling to repair its economy and establish rules for its post-Mubarak election. The country's benchmark EGX 30 Index was down 4.5 per cent to 4592.31 points last week.

Elsewhere in the region: Bahrain's index lost 0.6 per cent to 1266.37 points last week; Oman's benchmark lost 3.9 per cent to 5426.56 points; and Kuwait's index was down 1.3 per cent to 5850.60 points.

Saudi Arabian shares rallied for a second day, sending the benchmark index to its highest intraday level in a week, after US retail sales data eased concern the world's biggest economy is headed for a recession.

Saudi Basic Industries Corporation, the world's biggest petrochemicals maker, and Al Rajhi Bank, the kingdom's largest publicly traded lender by assets, paced the gains.

The Saudi Tadawul All-Share Index rose 1.93 per cent yesterday to 6155.88.