Gulf stock markets lack direction before Brexit vote

Stock markets in the Gulf look set to lack direction and trade in thin volumes on Thursday as Britons vote to decide whether to stay in the European Union.

MSCI’s broadest index of Asia-Pacific shares outside Japan is up just 0.2 per cent and oil prices are little changed.

Investors in Gulf bourses have remained largely on the sidelines over the last several weeks because of Ramadan and summer holidays.

“In the event of an exit from the EU the USD would strengthen, weakening commodities, and the impact would be more drawn out for the markets. But if the remain camp wins, then the volatility will fizzle out quickly,” said a Bahrain-based equity strategist.

Egypt, however, has been hit by contractionary monetary policy over the past several weeks, prompting investors to cash out of the stock market, a trend which could continue on Thursday.

The main index, last at 7,156 points, has been technically bearish since it broke earlier this week below its April and May lows, triggering a head & shoulders pattern pointing down to the 6,700 point area.

Also read: Market volatility to intensify as Brexit vote looms