RIYADH May 22 Firmer oil prices and the return
of slight optimism in global bourses may help lift Gulf
stock markets on Monday, while a surprise interest rate hike in
Egypt may hurt that market.
Brent crude oil price were trading at $53.93 per barrel up
0.6 percent from the last close as OPEC-led supply cut may not
only be extended into next year but might also be deepened to
tighten the market and prop up prices.
With the holy month of Ramadan starting next week, volumes in
Gulf markets could languish as investors unwind certain
positions, especially in stocks whose valuations are stretched,
or keep long term allocations intact, leaving little room for
markets to swing significantly in either directions.
At a meeting of its Monetary Policy Committee, the Egyptian
central bank hiked its overnight deposit rate to 16.75 percent
from 14.75 percent and its overnight lending rate to 17.75 from
15.75 percent, confounding the expectations of economists who
forecast rates were unlikely to change.
Local traders may now chose to exit positions in stocks and
instead park their money in higher interest bearing and safer
deposits at the bank.
Meanwhile companies that carry a large chunk of debt may be
hurt, as now higher interest expense weighs on their bottom
line, while those that are consumer driven sectors may also come
under pressure as people tend to spend less in a higher interest
(Reporting by Celine Aswad; Editing by Saeed Azhar)