Arabian Gulf stocks rose on investor optimism that an Opec meeting on Wednesday could result in a deal between some of the world’s biggest oil producers to cut supply.
That could trigger a rally in energy prices and revive economies such as those in the region that are reliant on oil.
Of the major stock markets, Saudi Arabia’s benchmark index Tadawul led gains in the GCC, rising 0.7 per cent. Dubai’s key stock gauge, the DFMGI, increased 0.4 per cent, while Abu Dhabi’s main index, the ADSMI, gained 0.6 per cent.
“Saudi’s 13 per cent monthly gain is causing a growing number of analysts to question the sustainability of such a move, especially since it is completely uncorrelated to the price of oil, which would be a screaming red flag just in itself,” Al Masah Capital, a Dubai-based asset manager, wrote in a note to clients.
“If Opec manages to find an output deal, then the Saudi rally will have further legs, but if nothing comes out of the Vienna meeting then that would constitute the perfect reason to book profits and move to the sidelines.”
Saudi Arabia is Opec’s biggest oil producer and its economy has been among the worst hit by the collapse of oil prices starting in the summer of 2014. The price of oil lost more than 70 per cent of its value since then but has rebounded from a 10-year low at the beginning of the year.
The IMF is forecasting that the kingdom, the region’s biggest economy and the most reliant on oil, will experience economic growth of 2 per cent in 2017 from 1.2 per cent in 2016.
mkassem@thenational.ae
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