Imogen Lillywhite at ZAWYA: Oil prices could stablise below $70 per barrel in the next couple of months as markets react to interest rate cuts, uncertainty around the US election and the likelihood of OPEC production increases by the end of the year, experts have said. But how are lower oil prices likely to affect GCC stock markets?
While analysis after the global market selloff following the unwinding of the yen carry trade last month suggested a rout of GCC stock markets could occur if oil prices fell below $70 per barrel, the alternative view is that markets, particularly in the UAE and Saudi Arabia, do not correlate as closely to the oil price as they once did.
Arun Leslie John, chief market analyst, Century Financial said oil price and stock market correlation is still present to a degree in the GCC due to oil’s role as a major export, but it is not as pronounced as it is made out to be, and not as present as it was five to six years ago.
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