Egyptian bourse registers biggest annual gain since 2016

Most stock markets in the Middle East ended higher on Sunday, with the Egyptian index chalking up its biggest annual gain since 2016, helped by investors hedging against high inflation and a weak domestic currency.

Egypt’s blue-chip index (.EGX30) advanced 0.8%, extending its 2023 gains to a 70.5%.

Top lender Commercial International Bank (COMI.CA) was up 75% over the year while tobacco monopoly Eastern Company (EAST.CA) concluded the year 98.5% higher than at the start of 2023.

Annual inflation in Egypt had been working its way higher for two years, hitting a record 38% in September.

In the past few months an already weakened currency has plunged to about 50 pounds to the US dollar on the black market compared with the official rate of 30.85 pounds.

Saudi Arabia’s benchmark index (.TASI) rose 0.3%, up 14.2% over the year, on expectations of interest rate cuts in 2024.

Oil giant Saudi Aramco (2222.SE) added 13.1% for its biggest annual gain since listing in December 2019 despite receding oil prices.

Markets expect the Federal Reserve to start cutting US interest rates in March, according to the CME FedWatch tool, a shift from assumptions last month.

Monetary policy in the six-member Gulf Cooperation Council is usually guided by the Fed’s decisions because most regional currencies are pegged to the dollar.

However, the Saudi index gains were capped by weak oil prices.

Oil prices, which fuel the Gulf economies, dropped more than 10% in 2023, ending a two-year winning streak, as geopolitical concerns, production cuts and central bank measures to rein in inflation triggered big price fluctuations.

A Reuters survey of 34 economists and analysts forecast that Brent crude will average $82.56 in 2024, down from November’s $84.43 consensus, on expectations that weak global growth will cap demand. Continuing geopolitical tensions, however, could provide price support.

The benchmark index (.QSI) in Qatar, the world’s top exporter of liquefied natural gas (LNG), advanced 2.3% but was up only 1.4% annual for the year.

US natural gas futures fell nearly 44% in 2023 for their biggest annual percentage fall since 2006, pressured by record production, ample inventories and relatively mild weather.

Elsewhere, the Bahrain bourse (.BAX) registered a 4% annual gain while the Oman market (.MSX30) was down more than 7% for the year.

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