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Gulf stock markets consolidate as oil price stabilizes

Xinhua, January 16, 2015 Adjust font size:

With the price of oil finding a bottom above 45 U.S. dollars a barrel (U.S. crude), stock markets from Kuwait to Oman consolidated as investors switched their focus on regional earnings results.

Stock markets in the United Arab Emirates (UAE), which crashed at the end of last year, recovered significantly in the first two weeks of 2015. The Dubai financial market (DFM) index, DFMGI, closed 0.75 percent higher at 3,842.60 points, on Jan. 15. Since Jan. 1 the gauge has gained two percent in value.

Oil prices climbed from nearly a 6-year low at around 45 dollars per barrel last Monday to 48.30 dollars per barrel (U.S. crude) earlier Thursday.

Xu Xiaojie, the divisional head of the Chinese Academy of Social Sciences, told Xinhua in an interview on Tuesday at the 6th Gulf Intelligence UAE energy summit in Abu Dhabi that "We expect the price of oil to pick up because after the winter, demand for oil will recover. We also think that oil producers will step in to lift prices as production costs become too high if oil prices remain at a five-year low."

Arjuna Mahendran, the chief investment officer for wealth management at bank Emirates NBD, the biggest lender in the UAE, said "in January, markets should shift their focus from oil prices to earnings and dividend announcements."

"The earnings season has begun with a few of the Saudi Arabian consumer and petrochemical companies announcing fourth quarter 2014 results that beat expectations overall," Mahendran added.

The Kuwait stock exchange's price index gained 0.17 percent (10.96 points) on Thursday, while the Omani MSM-30 index added 1.34 percent in value. The Saudi Arabian stock market Tadawul, the most valuable capital market in the GCC, fell by 1.09 percent on Thursday, but since Jan. 1, 2015, the gauge added around one percent.

"However, as petrochemical companies share prices have a high correlation to oil prices we would be cautious at this moment," said Mahendran.

Earlier in the week, UAE minister of energy Suhail Al Mazroui said the 12 member states of the Organization of Petroleum Exporting Countries (OPEC), to which the UAE belongs, would no longer aim to defend oil prices at certain levels as global energy markets, with the rise of shale oil in the United States and elsewhere, became too complex.

He said no country or group of countries today has the capability to dictate oil prices. Endit