Easing of Restrictions in Domestic Markets, Recovery in Oil Prices to Encourage Investors

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CORONAVIRUS IMPACT

Global equities continued the positive trajectory for the second consecutive week on the back of optimism over gradual reopening of several economies across the world. Furthermore, market participants are encouraged by the progress made in vaccine development, which could accelerate the pace of recovery in global economies. 

The economic indicators during the week was less bleak than street estimates, especially the decline in durable goods and rise in unemployment. Oil prices continued the positive momentum with a surge of 7.74% during the week, extending the gains to 87.47% during the month of May, but remains lower by 42.16% in YTD terms. 

For the region, trading activity was subdued as 2 out of the 7 indexes were closed for the entire week, while the rest of the indexes witnessed a shortened trading week on occasion of Eid. Oman was the best performing index regionally with gains of 3.31%, followed by 1.16% in Dubai, 0.45% in Bahrain, and 0.16% in Abu Dhabi, while Kuwait was the only index to close in red with losses of 0.10%. 

Going forward, equity markets are likely to continue the upward trend; however, investors should remain cautious as significant risk still persist within the global economies. The possibility of second wave of infections and persistent decline in discretionary spending could potentially delay the widely expected recovery in global economies. 

The current rally could be an opportune time for investors to potentially rebalance their investment portfolios by offloading riskier assets and increase allocation towards sectors/companies that should benefit from the pandemic, to reduce the overall risk. 

For the region, equity markets are likely to catch up with the global markets due to the limited participation from investors in the previous week. Moreover, the easing of restrictions in domestic markets and recovery in oil prices should also be encouraging and lead to investors taking calculated risk within the regional markets.

Indexes   Last WTD (%) MTD (%) YTD (%)
Dubai (DFMGI) 1,961.48 1.16% -3.21% -29.06%
Abu Dhabi (ADSMI) 4,119.32 0.16% -2.63% -18.84%
Saudi (SASEIDX) Closed NA 6.89% -16.03%
Kuwait (KWSE) 4,157.56 -0.10% -1.63% -15.34%
Egypt (EGX30) Closed NA 0.28% -27.26%
Bahrain (BHSEIDX) 1,276.06 0.45% -2.65% -20.75%
Oman (MSM30) 3,520.80 3.31% -0.53% -11.56%

 

Commodities    Value WTD (%) MTD (%) YTD (%)
Gold (s/OZ) 1728.3 -0.45% 2.87% 13.93%
Silver ($/Oz) 17.87 3.81% 18.94% 0.20%
WTI ($/bbl) 35.32 5.24% 87.47% -42.16%
Natural Gas 1.84 5.14% -5.59% -15.94%
OPEC Oil ($/bl) 37.84 7.74% 49.74% -42.67%
Copper ($/MT) 5345.87 1.05% 1.05% -13.78%
Aluminium ($/MT) 1536.93 1.96% 1.95% -15.67%

 

FX Rates   Value WTD (%) MTD (%) YTD (%)
USD/AED 3.6728 0.00% 0.00% 0.00%
USD/SAR 3.7558 -0.05% 0.01% 0.13%
USD/EGP 15.8424 -0.13% 0.91% -0.99%
USD/EUR 0.9006 -1.81% -1.30% 1.00%
USD/JPY 107.83 0.18% 0.62% -0.72%

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