Gulf Traders Stuck at Their Screens Face Unusually Busy Summer

A sun-parched corner of the financial world -- where trading volumes usually drop off sharply in the summer months -- will keep humming in the heat this year.

With day-time temperatures regularly reaching above 100 degrees Fahrenheit, traders from the region often take vacations to more temperate climates during July and August. This time round, disgruntled expatriates and locals from Riyadh to Dubai are confronting an increase in trading volumes as the coronavirus pandemic forces many of them to put their travel plans on hold.

The unusually high presence of traders may fuel the hunt for bargains and support a recovery in the region’s markets, according to Epicure Investment Management LLC. Equities in the region have underperformed emerging markets this year as energy-dependent economies grappled with the twin punch of an oil-price collapse and the coronavirus shock.

Gulf Traders Stuck at Their Screens Face Unusually Busy Summer

“Market liquidity will be better than most summers as the normal exodus of locals will not take place,” said Mark Krombas, a Doha-based senior portfolio manager at Epicure, who has postponed a trip to in Exeter, in southwest England, to October. “Governments have acted fast and their cautious and methodical easing of restrictions and support for affected companies will be rewarded by the markets in coming months.”

With corporate earnings feeling the effect of the lockdowns, there is also potential for some nasty surprises, said Tarek Fadlallah, the chief executive officer of the Middle East unit of Nomura Asset Management.

“We will hear a lot of negative anecdotes about business closures and job losses across the region,” said Fadlallah, who will be working this summer from his home on Dubai’s Palm Jumeirah, a group of artificial islands shaped like a palm tree.

In the debt market, companies seeking to weather an economic downturn will likely rush to raise funds to take advantage of a decline in borrowing costs after the March rout.

“It’s not only because people are stuck,” said Abdul Kadir Hussain, the head of fixed-income asset management at Arqaam Capital in Dubai. “Investors will be busy with new issues, monitoring default risk for issuers that have been hit very hard by the crisis and working on protecting the gains they have made since the lows in March.”

©2020 Bloomberg L.P.

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