Mideast Stocks: Strategists Won’t Call Bottom for Gulf Equities as Risks Build - Bloomberg
The selloff in Persian Gulf equities won’t come to an end just yet, according to strategists, who say the risk of lower oil prices and a probable US recession will keep gains at bay.
“There could be more pain for Gulf markets from current levels,” said Noaman Khalid, associate director of indices, macroeconomics and strategy at Arqaam Capital. A lack of positive catalysts would leave the region’s equities “exposed to global vulnerabilities,” he said in written comments.
The MSCI GCC Countries Combined Index has slumped 13% this quarter, marking its worst three-month performance since March 2020, and regional benchmarks including those in Saudi Arabia and the United Arab Emirates have given up most of their yearly gains. The gauge is set to snap a sequence of handing investors positive returns every quarter since the start of the pandemic.
Gulf countries were seen as a haven by investors over the past year as oil prices soared and interest rates climbed, benefiting benchmarks which generally have big weightings of banking and energy shares. Regional equities gave up most of their yearly gains in recent weeks as sentiment soured due to the prospect of a US recession and as crude prices started to pull back from recent peaks.
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