Most major Gulf equities got off to a good 2023 start on Monday, with Egypt outperforming regional peers, as investors shrugged off concerns about a potential recession, crude oil demand and the U.S. Fed hiking rates further.
The IMF warned on Sunday about a tougher year in 2023 for the global economy with the main engines of growth - the United States, Europe and China - all experiencing weakening activity.
The new year is going to be "tougher than the year we leave behind", IMF Managing Director Kristalina Georgieva said on the CBS Sunday morning news program "Face the Nation."
Crude prices, which are highly correlated with Gulf financial markets, swung wildly in 2022 and are expected to remain under pressure in 2023.
A Reuters poll showed on Friday 30 economists and analysts forecast Brent crude will average $89.37 a barrel in 2023, about 4.6% lower than the $93.65 consensus in a November survey. The global benchmark averaged $99 per barrel in 2022.
Hawkish Fed rate hikes many pose another challenge for the Gulf economy as most Gulf Cooperation Council countries (GCC) have their currencies pegged to the U.S. dollar and generally follow Fed policy moves, exposing them to direct impacts from any Fed monetary tightening.
Wael Makarem, senior market strategist-MENA at Exness, said local markets began 2023 with some volatility as uncertainty remains a strong factor, but energy prices could drive markets if the Ukraine war continues and China starts opening up following its abolition of COVID-19 restrictions.
Abu Dhabi's index (.FTFADGI) advanced 0.4% on Monday, bolstered by a 0.6% increase in the country's largest lender First Abu Dhabi Bank (FAB.AD).
The Abu Dhabi index was 2022's best performer among its GCC peers, finishing the year with a more than 20% gain, after hitting an all-time high in early November.
The benchmark index (.QSI) of Qatar, among the world's top exporters of liquefied natural gas, gained 1.4% on the back of
a 4% hike in Qatar Islamic Bank (QISB.QA) and a 1.6% rise in Qatar National Bank (QNBK.QA).
The Qatari index last year posted its first annual loss since 2017, dropping 8.1% in 2022.
Saudi Arabia's benchmark index (.TASI) rose 0.3% with luxury real estate developer Retal Urban Development Company (4322.SE) increasing 0.8% and Al Rajhi Bank (1120.SE) gaining 0.9%.
Among other stocks, Etihad Atheeb Telecom (7040.SE) soared more than 9% after it signed a 77-million-riyal ($20.49 million) contract with Saudi Arabia's Najran province on Sunday.
Dubai's index (.DFMGI) fell 0.2%, pressured by a 1.3% decline in Dubai Electricity & Water Authority (DEWAA.DU) and a 1.4% drop in its district cooling subsidiary Emirates Central Cooling Systems Corporation (Empower) (EMPOWER.DU).
Outside the Gulf, Egypt's blue-chip index (.EGX30) closed 2.5% higher, with Commercial International Bank Egypt (COMI.CA) climbing 3.1% while Abu Qir Fertilizers And Chemical Industries (ABUK.CA) was up 5.2%.
Egypt's resilient index was the best performer in 2022 among its Middle Eastern peers, posting a more than 22% gain despite facing economic headwinds from the war in Ukraine.
The Egyptian stock market reversed earlier losses to gain in the final quarter after an IMF deal and central bank support to allow lenders greater flexibility in currency trading.
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