DUBAI: Concerns over an extension of the first-quarter earnings deadline will overhang Egypt's shares next week, while investors in the United Arab Emirates and Qatar hold positions as index compiler MSCI's review draws closer. The Egyptian Financial Supervisory Authority gave listed companies a one-month extension to post first-quarter earnings, until June 15, pushing the market into prolonged uncertainty. "For companies that are able to present their March 31 earnings releases by the usual timeline and show that a recovery plan is in place — it would be a very powerful thing to do," said Nader Khedr, an equity research analyst in Cairo. Meanwhile, property stocks will continue to face pressure as court cases unfold. A local Egyptian newspaper said property firm Palm Hills, which saw an Egyptian court scrap a state land sale to the developer, would appeal any further cancellations of deals. Property firms in Egypt are reeling under a string of legal challenges to their land holdings since a court ruled last year that a state deal with Talaat Moustafa Group (TMG), the country's biggest developer, was illegal. Traders will be cautious as regulations evolve under the new government. "We will continue trading sideways until we see the intentions of the parties here in Egypt and the military council and the revolutionary alliance," Khedr said. "Of course, any clashes or misunderstandings will have a very negative impact." MSCI dominates UAE, Qatar Markets in Qatar and the United Arab Emirates, both under review for upgrade to emerging market status by MSCI, will meander as traders await clarity on the outcome. Success would see new foreign fund inflows into the three bourses in the two countries. "We're really looking at what the MSCI decision will be over the next two months," said Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading. "That will decide the direction." Analysts are generally more optimistic on Qatar's chances of inclusion in the index, since it has made headway in implementing a global standard of payment settlement, called Delivery versus Payment. While Qatar's long-term outlook is upbeat, its "short-term performance may be somewhat negative despite the good earnings results we saw over the past few weeks," says Sleiman Aboulhosn, assistant fund manager at Al Masah Capital. "The recovery from March's lows has surely been robust but we are now facing a situation where gains are considered by some to be overdone and so there's a mixed sentiment in the market," he added. Saudi Arabia's bourse, aligning itself with oil price movement, is forecast to track international markets as local catalysts are thin post first-quarter earnings. "The market is stuck in a consolidation phase and is holding its cards close to its vest," said Amro Halwani, a senior trader at Shuaa Capital in Riyadh. "We're basically waiting on more guidance from dominant international markets to break in and set a solid trend." Petrochemical stocks, taking a breather from recent rally driven by high oil prices, are seen outperforming the index next week. The sector's index rose 5.7 percent in April. "Over the medium term, we expect construction and material related sectors to benefit as the kingdom's multi-billion dollar budget boost expands the order book of the sector's major players," Halwani said. Contractors Drake & Scull International PJSC, Al-Khodari and Sons Co and Saudi Arabian Amiantit are potential gainers, he added. In Kuwait, markets are awaiting the formation of a new government and how the new cabinet gets along with parliament will be closely watched by market players, traders say. The cabinet resigned this month to avoid the questioning of three ministers in parliament. Kuwait's ruler asked the outgoing prime minister to form a new cabinet — his seventh since he was first appointed in 2006. "Liquidity has been an issue in Kuwait for a while now. It may come back when the government is formed," said a Kuwait-based trader on condition of anonymity. –Additional reporting by Isabel Coles in Cairo
