DUBAI // Gulf stock markets could suffer a double-digit correction as a slump in summer trading and little improvement in the wider economy spark selling across key sectors, analysts said.
The rally ? four of seven markets are at 2009 highs in rising volumes ? is unlikely to be sustained, not only because stocks are overpriced but because the economic downturn is expected to send many wealthy expatriates home for good.
"I think we're looking at a serious round of profit taking before the end of June," said Sanyalaksna Manibhandu, Emaar Saudi Financial Services head of research.
Gulf exchanges have rallied strongly since March 1, with Qatar's index surging 70 per cent, Saudi Arabia rising by 37 per cent and Kuwait up by a nearly a third. Dubai has added 28 per cent and Abu Dhabi 15 per cent, while the smaller Oman and Bahrain indexes have climbed 17 and 2 per cent respectively.
"In a normal situation when an economy is good, one would expect some profit-taking and consolidation after such a big move," said Azam Braikan, Saudi-Swiss Securities head of brokerage in Riyadh.
"So with the credit crunch and the global economic crisis, it's fair to say stocks are overbought and that prices don't reflect earnings."
The region's recent gains mirror advances in international exchanges and were bolstered by oil's recovery from a low of $32.40 last December to near a seventh-month high of about $68 a barrel on Wednesday.
Rising crude prices bolster state revenues in the Gulf, the world's most important oil-exporting region.
Global risk appetite has been rising and the safe-haven dollar has slumped as investors largely discount gloomy outlooks from economic sages including Nobel-prize winning economist Paul Krugman and former Federal Reserve chairman Alan Greenspan.
But world stocks slipped on Wednesday after job losses in the US dampened hopes of a swift economic recovery.
"The global equity rally has not been supported by fundamentals and was based on a false premise that a rally on Wall Street would bolster Main Street and we're not out of the woods yet," said Sunil Dhall, vice-president at Gulf Baader Capital Markets in Muscat.
"Gulf markets can move independently to an extent, but if global equities plunge, then our region will not be insulated."
June will be a crucial month for the Gulf, with the school year ending and thousands of expatriates returning home, while many locals are likely to sell stocks before escaping for the summer.
This may be a usual phenomenon, particularly in the United Arab Emirates where foreigners make up about 80 per cent of the population, but the difference this time is that many of the people leaving are not expected to return.
"We won't know the truth until September or October when these people would have been due to return," said Mr Manibhandu.
"Of course, some will be replaced by new migrants, but if they come on lower wages than this will affect spending and the wider economy as well property rents."
Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading, does not foresee trading suffering its usual seasonal slump.
"It's very easy to call a correction after a rally, but I think the market will move sideways over the summer," he said.
*Reuters
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
'The Last Days of Ptolemy Grey'
Rating: 3/5
Directors: Ramin Bahrani, Debbie Allen, Hanelle Culpepper, Guillermo Navarro
Writers: Walter Mosley
Stars: Samuel L Jackson, Dominique Fishback, Walton Goggins
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Know your cyber adversaries
Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.
Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.
Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.
Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.
Phishing: Aims to secure personal information, such as passwords and credit card numbers.
Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.
Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.
Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.
Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.
Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.
Zero-day exploit: Exploits a vulnerability in software before a fix is found.
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HAJJAN
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Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
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In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Basquiat in Abu Dhabi
One of Basquiat’s paintings, the vibrant Cabra (1981–82), now hangs in Louvre Abu Dhabi temporarily, on loan from the Guggenheim Abu Dhabi.
The latter museum is not open physically, but has assembled a collection and puts together a series of events called Talking Art, such as this discussion, moderated by writer Chaedria LaBouvier.
It's something of a Basquiat season in Abu Dhabi at the moment. Last week, The Radiant Child, a documentary on Basquiat was shown at Manarat Al Saadiyat, and tonight (April 18) the Guggenheim Abu Dhabi is throwing the re-creation of a party tonight, of the legendary Canal Zone party thrown in 1979, which epitomised the collaborative scene of the time. It was at Canal Zone that Basquiat met prominent members of the art world and moved from unknown graffiti artist into someone in the spotlight.
“We’ve invited local resident arists, we’ll have spray cans at the ready,” says curator Maisa Al Qassemi of the Guggenheim Abu Dhabi.
Guggenheim Abu Dhabi's Canal Zone Remix is at Manarat Al Saadiyat, Thursday April 18, from 8pm. Free entry to all. Basquiat's Cabra is on view at Louvre Abu Dhabi until October
Veil (Object Lessons)
Rafia Zakaria
Bloomsbury Academic
ADCC AFC Women’s Champions League Group A fixtures
October 3: v Wuhan Jiangda Women’s FC
October 6: v Hyundai Steel Red Angels Women’s FC
October 9: v Sabah FA
PREMIER LEAGUE TABLE
1 Man City 26 20 3 3 63 17 63
2 Liverpool 25 17 6 2 64 20 57
3 Chelsea 25 14 8 3 49 18 50
4 Man Utd 26 13 7 6 44 34 46
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5 West Ham 26 12 6 8 45 34 42
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6 Arsenal 23 13 3 7 36 26 42
7 Wolves 24 12 4 8 23 18 40
8 Tottenham 23 12 4 8 31 31 39