Egyptian bourse registers biggest annual gain since 2016 | Reuters

Egyptian bourse registers biggest annual gain since 2016 | Reuters

Most stock markets in the Middle East ended higher on Sunday, with the Egyptian index chalking up its biggest annual gain since 2016, helped by investors hedging against high inflation and a weak domestic currency.

Egypt's blue-chip index (.EGX30) advanced 0.8%, extending its 2023 gains to a 70.5%.

Top lender Commercial International Bank (COMI.CA) was up 75% over the year while tobacco monopoly Eastern Company (EAST.CA) concluded the year 98.5% higher than at the start of 2023.

Annual inflation in Egypt had been working its way higher for two years, hitting a record 38% in September.

In the past few months an already weakened currency has plunged to about 50 pounds to the US dollar on the black market compared with the official rate of 30.85 pounds.

Saudi Arabia's benchmark index (.TASI) rose 0.3%, up 14.2% over the year, on expectations of interest rate cuts in 2024.

Oil giant Saudi Aramco (2222.SE) added 13.1% for its biggest annual gain since listing in December 2019 despite receding oil prices.

Markets expect the Federal Reserve to start cutting US interest rates in March, according to the CME FedWatch tool, a shift from assumptions last month.

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

However, the Saudi index gains were capped by weak oil prices.

Oil prices, which fuel the Gulf economies, dropped more than 10% in 2023, ending a two-year winning streak, as geopolitical concerns, production cuts and central bank measures to rein in inflation triggered big price fluctuations.

A Reuters survey of 34 economists and analysts forecast that Brent crude will average $82.56 in 2024, down from November's $84.43 consensus, on expectations that weak global growth will cap demand. Continuing geopolitical tensions, however, could provide price support.

The benchmark index (.QSI) in Qatar, the world's top exporter of liquefied natural gas (LNG), advanced 2.3% but was up only 1.4% annual for the year.

US natural gas futures fell nearly 44% in 2023 for their biggest annual percentage fall since 2006, pressured by record production, ample inventories and relatively mild weather.

Elsewhere, the Bahrain bourse (.BAX) registered a 4% annual gain while the Oman market (.MSX30) was down more than 7% for the year.

BRICS to Grow as #Saudi, #Iran, #UAE, Egypt, Ethiopia Join Ranks - Bloomberg

BRICS to Grow as Saudi, Iran, UAE, Egypt, Ethiopia Join Ranks - Bloomberg

Membership of the BRICS group of emerging-market nations is set to double, with Saudi Arabia, Iran, the United Arab Emirates, Ethiopia and Egypt to join its ranks on Jan. 1, South Africa’s envoy to the bloc said.

Current members Brazil, Russia, India, China and South Africa in August invited six other nations to become part of their group, pairing some of the planet’s largest energy producers with some of the biggest consumers among developing countries. Only Argentina declined the invitation after President Javier Milei, who took office this month, reversed his predecessor’s membership bid.

The five invitees sent senior-level representatives to a BRICS sherpa meeting in Durban, South Africa, earlier this month and they fully participated in the gathering, “a clear indication that they have accepted the invitation” to join, Anil Sooklal, Pretoria’s ambassador to the bloc, said in an interview Friday.

The new members will also send officials to a sherpa meeting in Moscow on Jan. 30, he said.

“BRIC” was coined in 2001 by economist Jim O’Neill, then at Goldman Sachs Group Inc., to draw attention to strong economic growth rates in Brazil, Russia, India and China. The term was intended as an optimistic scenario for investors amid market pessimism following the terrorist attacks in the US on Sept. 11 that year. The group held its first leaders’ summit in 2009 and invited South Africa to join a year later, adding another continent and the letter “S.”

About 30 countries want to establish ties with the bloc, Russian Foreign Affairs Minister Sergey Lavrov was cited by news agency Tass as saying this week.

Nigeria, Africa’s most populous nation, will seek to become a member of BRICS within the next two years, Minister of Foreign Affairs Yusuf Tuggar said in November.

Except for India, the BRICS have underperformed their emerging-market peers over the last five years, according to Bloomberg Intelligence. US-led sanctions have put Russia off limits for many foreign investors, and some sectors in China — especially technology companies — have also been sanctioned or face potential investment bans.

#Saudi Stocks Eye Bull Market as Rates Optimism Offsets Lower Oil - Bloomberg

Saudi Stocks Eye Bull Market as Rates Optimism Offsets Lower Oil - Bloomberg

Saudi stocks were set to enter a bull market as optimism about lower interest rates outweighed sliding oil prices, which are still the country’s main source of income.

The Tadawul All Share Index rose as much as 0.4% on Sunday, taking gains since the March lows to just over 20%. A fourth-quarter rally was largely driven by growing optimism that the Federal Reserve will shift to cutting interest rates in 2024. Central banks in the Gulf, like Saudi Arabia’s, largely follow the US monetary regulator’s decisions in order to protect their currency pegs to the dollar.

A fund manager survey from Saudi brokerage SNB Capital showed investors adopted a positive outlook in the fourth quarter and bearish views decreased to a record low — a sign sentiment has shifted from early October, when the index erased its 2023 gains on the back of the Israel-Hamas war. Survey participants continued to expect that oil prices, interest rates and inflation will be the main market drivers.

Crude prices slid in the fourth quarter as surging production from the US and elsewhere countered efforts by the OPEC+ alliance to shore up the market through output cuts. The outlook for demand is also fragile, with the International Energy Agency forecasting that growth will slow sharply next year.

But even as oil giant Saudi Aramco dropped nearly 6% in the last three months of 2023, it’s still the biggest contributor to the Tadawul’s gain this year. Al Rajhi Bank and utility firm ACWA Power Co. were also among the top gainers.