GCC stock markets will remain exposed to downside movements following last week’s poor economic data releases and the negative impetus it gave equities, as well as this week’s lower economic indicator forecasts. Investor sentiment will stay mixed, trapped between the US Federal Reserve’s intention to stop its asset purchasing program later this year on one side and the possibility that the economic revival will lose steam due to the pandemic effects on the other.
Equities in the region are also likely to be impacted by dipping oil prices, which have been on a negative trend for a while now and are expected to continue to do so as fears of an economic slowdown increase. This week’s US crude inventory figures will likely add more pressure on oil prices, as well as the lower anticipated data releases in all major economies. Various US and European indicators including price indices, business climate, and home sales are forecast lower than before.
While global economic uncertainties are expected to remain, the Dubai Financial Market will likely continue to climb thanks to strong national fundamentals. The main index is anticipated to extend the positive trend it started at the beginning of the month. The UAE’s economy will be less affected by the oil price retreat, thanks to its more diversified profile and its lower reliance on the energy sector compared to other GCC members. The market should also soar as sanitary restrictions are relaxed further.
Aramex should see its stock price improve as cheaper crude will reduce its operating costs. Solid regional fundamentals should help the firm keep its operations at sustainable levels although the global economic revival subdues. As a result, Aramex's stock price should rebound over the short term, even though it was on a slight downtrend for most of the year.
Union properties has seen its stock price stagnate for a couple of months and has recorded reduced volatility as the real estate market stabilizes and could see a positive reversal over the short term. The firm should see improved operations as economic fundamentals continue to improve and demand for real estate units increase, positively impacting the following quarter’s results.
The Saudi stock market is expected to stall as crude prices will continue weighing down on its performance. Tadawul’s progression will remain conditioned by the global oil demand and the strength of the US and Chinese economies, which are both major partners for Saudi Arabia. Traders will look forward to any surprises in the economic releases due this week for signs of an improving economic revival.
Baazeem Trading has seen its stock enter a correction in the last couple of weeks and should see some progress to the upside. The stock will be positively impacted by the increase in consumption levels in the coming weeks as the holiday season comes to an end and consumer behavior returns to normal. The company should also see its results improve as it will benefit from its exposure to the dynamic economies of the GCC and in particular that of the UAE.
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