Abu Dhabi: The regional stock markets are likely to be range-bound in the week ahead as the benefit of higher international oil prices, the mainstay of the region's exports, continues to be offset by the prevailing political uncertainty in the region, say experts.
They say continuing unrest in Libya, Syria, Yemen, Egypt and Algeria is forcing foreign institutional investors to stay away from some of the regional stocks, which otherwise look lucrative due to their attractive valuations.
"Oil prices have moved higher, but the political risks in the region are still prevalent. In the week ahead I expect no major moves. I expect more activity in individual companies in anticipation of first-quarter financial results," Anastasios Dalgiannakis, head of trading at Dubai-based Mubasher Financial Services, told Gulf News by telephone.
"The markets' focus in the coming weeks would be on company earnings. Markets will remain range-bound until we see the return of foreign investors to the region," he added.
The Dubai Financial Market index closed 0.14 per cent lower on Thursday at 1,555.41. The Abu Dhabi Securities Exchange general index, however, closed 0.21 per cent higher at 2,597.08. Gary Dugan, Chief Investment Officer-Private Banking at Emirates NBD, said in a research note that profit taking may hit global financial markets soon.
"The impact of the Japanese earthquake and the rise in oil prices will lead to weakness in global industrial production and industrial confidence. Japanese industrial production alone is expected to have fallen by over 15 per cent over the course of March and April. The rest of Asia will feel the effect," said Dugan. "The financial markets will also have to absorb a list of central bank's increasing interest rates over the coming months."
