Mideast Stocks: Gulf markets end mixed on Fed pause bets, volatile energy prices

Mideast Stocks: Gulf markets end mixed on Fed pause bets, volatile energy prices

Stock markets in the Gulf ended mixed on Thursday after soft U.S. economic data raised bets that the Federal Reserve would pause interest rate hikes next month, while volatile energy prices weighed on investor sentiment.

A slew of U.S. economic indicators generally surprised to the downside, adding to bets that the Fed is done tightening and rate cuts next year could amount to more than 100 basis points. Monetary policy in the six-member Gulf Cooperation Council is usually guided by the Fed policy because most regional currencies are pegged to the U.S. dollar.

Dubai's main share index gained 0.4%, helped by a 1.7% rise in Emirates Central Cooling Systems Co. In Abu Dhabi, the index finished 0.7% higher, buoyed by a 2.1% rise in conglomerate International Holding.

The Qatari benchmark declined 1.5%, as most of the stocks on the index were in negative territory including Qatar Islamic Bank, which was down 2.8%. 

Oil prices - a key catalyst for the Gulf's financial markets - rose, boosted by a large drawdown in U.S. crude inventories and production cuts by OPEC+, but a slowdown in China's manufacturing activity limited gains. China's manufacturing activity shrank again in August, an official factory survey showed on Thursday, fuelling concerns about weakness in the world's second-biggest economy.

Saudi Arabia's benchmark index fell 0.7%, weighed down by a 1.9% drop in Dr Sulaiman Al-Habib Medical Services and a 1.3% decrease in petrochemical maker Saudi Basic Industries Corp.

Outside the Gulf, Egypt's blue-chip index was up 0.3%, trading at all-time high, with Commercial International Bank closing 2% higher.

#Dubai Real Estate: Russians Are Top Emaar Property Buyers as Demand Stays Strong - Bloomberg

Dubai Real Estate: Russians Are Top Emaar Property Buyers as Demand Stays Strong - Bloomberg

Russians are the top buyers of properties from Dubai’s biggest developer, a sign that demand from investors seeking safe havens remains strong more than a year after Moscow’s invasion of Ukraine.

Emaar Properties PJSC didn’t provide the exact percentage of Russian buyers in a first-half investor presentation, but showed them as the largest segment of the market in a pie chart. Their appetite for property in the emirate have helped to push prices to record levels.

Sara Boutros, an analyst at CI Capital, estimates that Russians accounted for about 12% of buyers in Emaar developments this year, compared with second place in 2022 and ninth in 2020. Emaar has the biggest share of Dubai’s property market with around 30% of all home sales ahead of construction and acts as a proxy for the city’s wider real estate sector.

“We expect Russian flows to remain strong for the rest of the year,” she said. “That’s mainly due to the attractiveness of the luxury segment in Dubai where rental yields are very high and investment costs are low.”

#UAE leads first-half Mena M&A deal activity driven by sovereign funds

UAE leads first-half Mena M&A deal activity driven by sovereign funds

The UAE, the Arab world’s second-largest economy, dominated mergers and acquisitions activity in the Middle East and North Africa region, leading in both volume and value of transactions in the first six months of the year.

Government policies and efforts to boost the ease of doing business drove deal flow and foreign direct investment into the country, consultancy EY said in its first-half Mena M&A report.

Overall deal activity across the entire region, however, slowed due to the continued rise in interest rates amid global economic headwinds during the six-month period.

The number of deals fell 14 per cent year on year to 318 at the end of the first-half of this year, while the deal volume for the Gulf states reached 254.

“Deal making got off to a slow start in 2023 with rising interest rates, persistent inflation and economic uncertainty weighing heavily on M&A activity,” said Brad Watson, EY Mena strategy and transactions leader.

Emirates Global Aluminium's first-half profit slides 66% | Reuters

Emirates Global Aluminium's first-half profit slides 66% | Reuters

Emirates Global Aluminium's (EGA) first-half net profit slumped by 66% as metal prices corrected after reaching record highs in 2022, it said on Thursday.

One of the world's largest aluminium producers, EGA posted net profit of 2 billion dirhams ($544.62 million) for the first six months of the year, down from 5.9 billion dirhams a year earlier.

The United Arab Emirates company said that the average realised London Metal Exchange (LME) price for its aluminium was $2,359 a tonne in the first half, compared with $3,063 in the same period last year.

EGA's core earnings margin was 27%, continuing to lead industry peers, it said.

"At EGA we aim to achieve performance that is competitive for our sector throughout the economic cycle," said Chief Executive Abdulnasser Bin Kalban.

"In the first half of 2023 that is what we did - delivering solid financial results even as market conditions moderated from the significant volatility of recent years."

Aluminium prices reached a record high of $4,073.5 on the LME in March last year as the global economy recovered from the pandemic, but they have dropped this year as China has stepped up production.

EGA, which is jointly owned by Abu Dhabi state investor Mubadala and Investment Corp of Dubai, was formed in 2013 through a merger of state-owned Dubai Aluminium and Abu Dhabi's Emirates Aluminium.

The company has smelters in Abu Dhabi and Dubai and a bauxite mine in Guinea.

Most Gulf markets rise on Fed pause bets; #Saudi retreats | Reuters

Most Gulf markets rise on Fed pause bets; Saudi retreats | Reuters

Most major stock markets in the Gulf rose on Thursday after soft U.S. economic data raised bets that the Federal Reserve would pause interest rate hikes next month, although volatile energy prices weighed on investor sentiment.

A slew of U.S. economic indicators generally surprised to the downside, adding to bets that the Fed is done tightening and rate cuts next year could amount to more than 100 basis points.

Monetary policy in the six-member Gulf Cooperation Council is usually guided by the Fed policy because most regional currencies are pegged to the U.S. dollar.

Dubai's main share index (.DFMGI) gained 0.4%, led by a 0.7% rise in blue-chip developer Emaar Properties (EMAR.DU) and a 1% increase in budget airliner Air Arabia (AIRA.DU).

In Qatar, the main share index (.QSI) gained 0.2%, with petrochemical maker Industries Qatar (IQCD.QA) up 2.7%.

The Abu Dhabi index (.FTFADGI) added 0.4%.

Saudi Arabia's benchmark stock index (.TASI) slipped 0.2%, weighed down by a 1.2% fall in oil giant Saudi Aramco (2222.SE).

Oil prices, which fuel the Gulf economy, eased after data showed China's manufacturing activity shrank for the fifth straight month, and as investors cautiously awaited a U.S. personal consumption expenditure report later in the day for clues on the interest rate outlook.

Separately, Saudi Arabia's Lumi, one of the largest auto rental firms in the kingdom, said on Wednesday that it could raise up to 1.089 billion riyals ($290.34 million) after a price range was set for its initial public offering.