DUBAI, June 19 Depressed oil prices and lack of
fresh news may weigh on stock markets in the Gulf but hopes
that Saudi Arabia will join MSCI's group of emerging markets,
which would trigger billions of dollars of fund inflows, may
continue to buoy that market.
Saudi-listed stocks that could benefit from the the MSCI
upgrade have already been jovial include food producers Savola
and Almarai and some of the blue-chips
lenders like National Commercial Bank and the largest
petrochemical producer Saudi Basic Industries.
The MSCI review will be announced on Tuesday.
It is not unusual for stocks to rise ahead of such an event
as investors try to buy stocks before foreign funds start to
move money into the market once the decision has been made, but
some analysts are cautious, saying that current market
fundamentals are not very supportive.
"While we believe that an inclusion in watchlist for Saudi
will lead to enhanced market liquidity and generate more
interest in the Saudi market, we caution investors to be wary of
irrational exuberance as an inclusion is unlikely to change
market fundamentals which currently remain tepid," said a note
by Saudi's Alrajhi Capital.
Meanwhile Brent crude contracts are hovering near
2017 lows at $47.22 a barrel; they have closed below $50 a
barrel in the last eight consecutive sessions, which have kept
institutional funds away from most Gulf markets, a trend which
is likely to persist.
(Reporting by Celine Aswad; Editing by Saeed Azhar)