DUBAI, Sept 29 A rally in oil prices following
OPEC's surprise move to curb crude output modestly at its
meeting in Algeria is set to boost Gulf stock markets on
Brent oil soared 6 percent on Wednesday after the
Organization of the Petroleum Exporting Countries agreed to
limit its production to a range of 32.5-33.0 million barrels per
There is some scepticism over whether the deal can produce
any uptrend in oil prices and whether it will hold together over
the long term. But for now at least, it may have put a floor
Saudi petrochemical shares were particularly hard hit on
Tuesday and Wednesday, when the main Saudi index tumbled
7.1 percent over a two-day period. Petchems now look likely to
help the index rebound.
"Now that there is positive news to trade on, the industry
will outperform," said Mohammad Shammasi, chief investment
officer at Riyadh-based Derayah Financial.
Other Saudi sectors, especially consumer discretionaries,
may not be as upbeat because although higher oil prices will
help government finances, tough austerity measures - including
cuts to civil service bonuses announced this week - are expected
to remain in place.
News that the U.S. Congress overwhelmingly rejected
President Barack Obama's veto of legislation allowing relatives
of victims of the Sept. 11 attacks to sue Saudi Arabia is
negative but may have little impact on the stock market because
the economic implications for Riyadh, if any, are not yet clear.
The Saudi riyal has dropped moderately against the dollar in
the forwards market and Saudi credit default swaps
have risen only marginally.
Other Gulf bourses may be buoyed by both oil prices and firm
global equities; MSCI's broadest index of Asia-Pacific shares
outside Japan is up 0.8 percent.
(Reporting by Celine Aswad; Editing by Andrew Torchia)