Oil may buoy Gulf but trading volumes shrinking

 16 May 2016 - 9:30

Oil may buoy Gulf but trading volumes shrinking
A file photo of an investor monitoring the stock information at the Saudi Stock Exchange (Tadawul) in Riyadh, Saudi Arabia January 18, 2016. Reuters

 

DUBAI: Strong oil prices look set to support stock markets in the Gulf on Monday but shrinking trading volumes on the bourses suggest they are unlikely to rally far for now.

Brent crude futures have climbed more than 1 percent to as high as $48.66 a barrel on Monday, their highest level this year, after long-time bear Goldman Sachs said the market had ended almost two years of oversupply and flipped to a deficit.

This could boost petrochemical stocks and shares in other companies linked to the oil industry such as Qatari drilling rig provider Gulf International Services, which jumped 6.5 percent on Sunday to 37.00 riyals in its heaviest trade since mid-March. The stock faces technical resistance at the March peak of 39.80 riyals.

Nevertheless, with investors believing austerity policies in the Gulf have yet to show up fully in corporate earnings, the markets may lack the trading interest to mount an extended uptrend.

Trading volume in Saudi Arabia shrank on Sunday to its lowest level for a month, while volume in Dubai also fell sharply.

Dubai-listed GFH Financial may attract interest after it reported a net profit attributable to shareholders of $6.1 million for the first quarter of 2016, up 176 percent from a year earlier. 

Reuters