Regional Equity Markets To Remain Under Pressure

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CORONAVIRUS IMPACT

Global equity markets performed positively during the week as investors were encouraged by the progress and continued support from the Central Banks. Investors preferred to look at the brighter side of news regarding the pandemic, especially early signs of new cases stabilizing in European countries. 

Furthermore, the US Fed announcing a USD 2.3 trillion package to support market liquidity and keep credit flowing and lower oil prices also boosted sentiments during the week. Brent crude prices dropped 7.71% during the week over consensus fears that the production cuts would not be sufficient to offset the slack in global demand. For the region, equity markets reflected the sentiment in the global equities, to close on a positive note. 

For the week, 5 out of the 7 regional indexes closed in green while 2 closed in red. Abu Dhabi was the best performing index regionally with gains of 9.45%, followed by 9.17% in Egypt, and 6.22% in Dubai. Bahrain and Kuwait closed in red as they were down by 2.21% and 1.31%, respectively. 

Given that global economies are expected to witness meaningful slowdown, at least in Q1 and Q2 2020, investors should remain cautious and wait for flattening of the infection curve in the US and other major economies. Although, the Q1 2020 earnings are expected to be announced in the coming weeks, they might not reflect the full impact of the pandemic. Hence, it might be prudent to endure the uncertainty and focus on quality stocks with strong balance sheet and ability to seize on opportunities arising from the pandemic. 

For the region, equity markets would continue to remain under pressure as low oil prices coupled with expected recession across the globe would pose challenges for the governments and might lead to slowdown in public spending.  

Indexes   Last WTD (%) MTD (%) YTD (%)
Dubai (DFMGI) 1,830.02 6.22% 3.31% -33.81%
Abu Dhabi (ADSMI) 4,113.68 9.45% 10.15% -18.95%
Saudi (SASEIDX) 7,006.24 3.80% 7.70% -16.49%
Kuwait (KWSE) 3,979.16 -1.31% -2.55% -18.97%
Egypt (EGX30) 10,321.97 9.17% 7.59% -26.07%
Bahrain (BHSEIDX) 1,300.37 -2.21% -3.72% -19.24%
Oman (MSM30) 3,472.43 2.63% 0.70% -12.78%
Commodities    Value WTD (%) MTD (%) YTD (%)
Gold (s/OZ) 1688.9 4.48% 7.50% 11.33%
Silver ($/Oz) 15.32 6.46% 9.66% -14.08%
WTI ($/bbl) 22.76 -19.69% 11.13% -62.73%
Natural Gas 1.73 6.91% 5.67% -20.83%
OPEC Oil ($/bl) 31.48 -7.71% 38.43% -52.30%
Copper ($/MT) 5037.61 2.33% 4.34% -18.75%
Aluminium ($/MT) 1477.84 -1.28% -3.49% -18.91%
FX Rates   Value WTD (%) MTD (%) YTD (%)
USD/AED 3.6728 0.00% 0.00% 0.00%
USD/SAR 3.759 -0.05% -0.11% 0.22%
USD/EGP 15.72 0.13% 0.19% -1.75%
USD/EUR 0.9142 -1.18% 0.86% 2.52%
USD/JPY 108.46 0.01% 0.86% -0.14%

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