Markets mixed as Saudis fail to keep reform-related gains
Date is positive because it gives MSCI time to evaluate reform impact before taking a call on Riyadh
Middle East stock markets were mixed in mostly thin trade yesterday, with Saudi Arabia giving up early gains triggered by progress in reforms that could help it to join MSCI’s emerging market index.
The Saudi index rose as much as 0.5 per cent in early trade but closed 0.1 per cent down in its thinnest volume since last September.
The exchange said late on Thursday that it would extend the period for settling trades and introduce short-selling on April 23 in reforms demanded by MSCI.
The reforms had been expected in the second quarter, but the date is positive because it gives MSCI time to evaluate their impact before deciding in June whether to put Riyadh on its review list.
However, the market began running out of steam after a joint committee of ministers from Opec and non-Opec oil producers announced their agreement to review whether a global pact to limit supplies should be extended by six months, yesterday.
The prospect of an extension suggests that producers are not confident they can succeed in rebalancing the oil market, and Saudi Arabia could end up having to bear much of the burden of output cuts, as it is now. This would limit the government’s income and could force it to curb spending. In Dubai, the index edged up 0.2 per cent.
Abu Dhabi’s index lost 0.7 per cent.