DUBAI: Stock markets in the Gulf may trade narrowly on Sunday as investors take comfort in firmer oil pries and instead look to quarterly earnings as a litmus test for the health of the regional economy.
Oil prices rose on Friday and notched their third straight week of gains as market sentiment turned more upbeat amid signs a persistent global supply glut may be easing. Brent futures ended the session up 1.3 percent at $45.11 per barrel.
But last week pockets of weakness in Saudi Arabia’s domestic economy were starting to show, as retail companies reported a disappointing set of results.
Shares in retailer Fawaz Alhokair dropped their daily limit of 10.0 percent on Thursday after the company announced its profits were almost halved, missing estimates by a wide margin.
Late on Thursday, after the market closed, Dar Al Arkan , one of Saudi Arabia’s largest property developers, extended an earnings slump as it reported a 60.7 percent fall in first-quarter net profit due to declining sales revenue.
The company made a net profit of 57.85 million riyals ($15.43 million), missing the 82.1 million riyals that analysts at NCB Capital had predicted.
Shares in Dar Al Arkan may fall on Sunday, erasing some of the 3.9 percent gains made over the last month.
But a Dubai-listed cyclical stock, courier company Aramex reported a 12 percent rise in first quarter earnings on Sunday, in line with analysts expectations. In a statement, Aramex attributed the rise in net profit to growth in all its regions. Its shares are up 8.2 percent year-to-date.
Meanwhile, Abu Dhabi Islamic Bank posted a 6.9 percent rise in first-quarter net profit, aided by higher revenues and a growth in customers, the company said on Thursday.
The emirate’s largest sharia-compliant bank made a net profit of 482 million dirhams ($131.2 million), beating the 446 million dirhams analysts at EFG Hermes had forecasted.
Shares in the Islamic lender are up 10.7 percent year-to-date.
Banks across the region have reported earnings that have either beat, or came in line with, analysts expectations. This may encourage investors to buy shares in that sector this week.
Copyright Reuters, 2016
Courtesy : BRecorder