MIDEAST STOCKS-Gulf equities may gain as investor confidence grows

Monday, 29 February 2016:  Stock markets in the Gulf may rise on Monday amid signs that oil prices may have bottomed out, with Brent crude futures rising 1.2 percent to $35.53 a barrel in Asian trade.

“Now it is about momentum trading in select stocks,” said Muhammed Shabbir, head of equities funds at Dubai-based Rasmala.

Dubai’s Drake and Scull, which is up 48 percent since hitting a record low in January, is one of the beaten-down stocks that has been attracting large volumes over the last five trading sessions.

Riyadh’s index, last at 6,092 points, is testing technical resistance on the early February and end-January peaks of 6,056-6,099 points. Any clear break would turn it short-term bullish, triggering a right triangle formed by the highs and lows since mid-January and pointing up to around 6,850 points.

Petrochemical shares boosted the index on Sunday, although volumes were modest. The latest monthly Reuters survey of Middle East fund managers, published on Monday, showed 43 percent said they expected to boost their allocations to Saudi stocks – the highest figure since February 2015. Only 7 percent anticipated reducing allocations.

The outlook is less positive in Egypt, where the fund survey showed managers turning negative on balance towards Cairo stocks because of the country’s endemic hard currency shortage.

Yields on Egypt’s three-month and nine-month treasury bills rose sharply at an auction on Sunday, signalling expectations for an interest rate rise next month. (Reporting by Celine Aswad; Editing by Andrew Torchia)