Recovery in Oil Prices Positive Catalyst for Regional Markets

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CORONAVIRUS IMPACT

Global equities performed positively during the week as investors are encouraged by synchronized policy responses by leading Central Banks, and gradual reopening of the economies. However, the markets are shrugging off a host of data indicating an unprecedented contraction in economic activity, especially the April employment report of 20.5 million job losses in the US, roughly erasing all the jobs added in the last decade. 

Brent crude recorded a second consecutive week of gains, up 17.13% during the week, as production cuts have been faster than expected, while demand is forecast to increase on the back of gradual reopening of economies. 

For the region, the performance was negative during the week all indexes closed in red. Saudi Arabia was the worst performing index regionally, with losses of 6.81%, followed by 5.13% in Dubai, 3.99% in Abu Dhabi, 3.58% in Egypt, and 2.37% in Bahrain. 

Going forward, equity markets will remain hopeful about the gradual reopening of economies and bottoming out of economic activity, but investors should expect the recovery to be slow and prolonged in the coming quarters. Hence, investors should utilize pullbacks in the coming weeks and months as a buying opportunity, and restructure their portfolios with a long-term perspective. 

For the regional markets, the recovery in oil prices and easing of restrictions in some countries will be a positive catalyst, especially for rebalancing portfolios with appropriate diversification across asset classes.

Indexes   Last WTD (%) MTD (%) YTD (%)
Dubai (DFMGI) 1,922.61 -5.13% -5.13% -30.46%
Abu Dhabi (ADSMI) 4,061.62 -3.99% -3.99% -19.98%
Saudi (SASEIDX) 6,628.53 -6.81% -6.81% -20.99%
Kuwait (KWSE) 4,137.93 -2.09% -2.09% -15.74%
Egypt (EGX30) 10,176.73 -3.58% -3.58% -27.11%
Bahrain (BHSEIDX) 1,279.73 -2.37% -2.37% -20.52%
Oman (MSM30) 3,483.98 -1.57% -1.57% -12.49%

 

Commodities    Value WTD (%) MTD (%) YTD (%)
Gold (s/OZ) 1700.65 0.09% 1.22% 12.11%
Silver ($/Oz) 15.45 3.41% 2.86% -13.35%
WTI ($/bbl) 24.74 25.08% 31.32% -59.48%
Natural Gas 1.82 -3.54% -6.46% -16.72%
OPEC Oil ($/bl) 30.97 17.13% 22.56% -53.08%
Copper ($/MT) 5245.86 3.12% -0.84% -15.39%
Aluminium ($/MT) 1482.21 -0.18% -1.68% -18.67%

 

FX Rates   Value WTD (%) MTD (%) YTD (%)
USD/AED 3.6728 0.00% 0.00% 0.00%
USD/SAR 3.755 0.03% -0.01% 0.11%
USD/EGP 15.7 -0.00% 0.00% -1.88%
USD/EUR 0.9224 1.31% 1.08% 3.44%
USD/JPY 106.65 -0.26% -0.49% -1.80%

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