Regardless of the news or violence and tension coming out of the greater Middle East region, trading on the Gulf State Arab markets seem to be doing just fine, if the new highs reached last week can be any indication.
Saudi Arabia companies posted positive first quarter earnings pushing the markets up, while the petrochemical sector has been forecast to continue to outperform as fuel prices rise. Analysts do expect a correction at some point as the trading moves to follow global equities and energy prices more mindfully.
The price of Brent crude topped $122/barrel last Wednesday due to a rebound in equities and a greater than anticipated fall in the US oil product surplus helped relieve the fear of an eroding demand for oil.
“I think investors are looking for pause, and new positions will be limited to mainly petrochemicals if at all,” said Muhammad Shabbir, chief investment officer and head of Saudi asset management at Rasmala Investment Bank.
Investors are remaining cautious until more large cap stockes in banking and real estate post their earnings.
“Not a lot of people are expecting blazing earnings growth,” said Ibrahim Masood, senior investment officer at Mashreq Bank. “Real estate and banks are still in a challenging environment.”