Egypt may recover slightly, Saudi could lag in Gulf

DUBAI: Egypt’s stock market may recover some of the previous day’s heavy losses on Tuesday while Gulf markets look set to stay within recent ranges because of a lack of fresh news and the approach of the holy month of Ramadhan.

Cairo’s index tumbled 2.5 per cent on Monday, its largest singleday decline since January 19, after the central bank unexpectedly raised interest rates by 2 percentage points to fight sky-high inflation.

The surprise prompted heavy selling by local retail investors but several foreign fund managers said they did not expect a lasting impact on the market partly because of the loose links between interest rates and the real economy in Egypt.

Also, higher rates could attract more foreign money to Egypt.

“We see today’s pull back in the EGX as a buying opportunity,” Mohamed el-Jamal, Managing Director of Capital Markets at Abu Dhabi’s Waha Capital, said on Monday.

In the Gulf, Saudi Arabia may lag after Brent crude oil , now at $53.57 a barrel, pulled back slightly from the highs at which it was trading during Saudi business hours on Monday.

Retail investors may choose to cash out ahead of Ramadhan, which often sees lower market liquidity.

Ramadhan is expected to start on Saturday.

Gulf Navigation , which jumped 5.6 per cent on Monday, may continue to attract interest in Dubai — its shares have been surging since Thursday, partly because it posted strong first-quarter earnings on Sunday.

One trader said that a strategic investor might be increasing its stake in the company, although ownership data from the exchange have not so far shown this.