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Oil near $50 may support Gulf bourses

Oil near $50 may support Gulf bourses

Petrochemical shares have given the greatest boost to Riyadh’s index over the last week

Shares in the Gulf may be supported on Wednesday by Brent oil prices near $50 a barrel, while Egypt’s bourse may see some profit-taking after concern about future interest rate hikes pulled down Wall Street.

Petrochemical shares have given the greatest boost to Riyadh’s index over the last week. But trading volumes have been shrinking as the market has been mainly driven by day traders who want a quick profit.

“For now the markets will continue to trade in a very narrow range, at least until further details concerning the Vision 2030 economic plan are announced,” said a Jeddah-based trader, referring to Saudi Arabia’s economic reform scheme.

Advanced Petrochemical may see some buying interest after its board recommended an increase in its share capital by 20 per cent, to SAR 1.97bn ($537m) from SAR 1.64bn, through a bonus share issue. The capital boost is to support its future investment plans.

But National Bank of Kuwait may encounter some pressure as its KD 137.6m ($473.2m) rights issue starts on Wednesday. The subscription period will close on June 16.

Cairo’s main index has outperformed its regional peers this year with a 7.8 per cent gain year-to-date, mainly due to the Egyptian currency devaluation in mid-March. A U.S. interest rate hike could increase pressure for fresh currency depreciation, encouraging buyers of stocks to hold off for now.

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