Mideast bourses seen hesitant ahead of holidays

Middle East markets may weaken on Wednesday following renewed declines in world stocks and oil prices as fresh doubts over European banks and a surprise slump in German manufacturing data make investors jittery once more.

Markets in Saudi Arabia and the United Arab Emirates are closed for Eid Al Fitr holidays to mark the end of the Muslim holy month of Ramadan, while Wednesday is the last day's trading of the week in Kuwait and Egypt, so the latest global wobbles will do little to convince investors to buy regional stocks.

Egyptian traders are already eyeing likely post-Eid market moves. Youssef Kamal from Naeem Brokerage says investors are likely to focus more on the local story than international moves.

"I think there will be bullish behaviour towards the banking sector, and certain individual stocks such as EFG-Hermes and Commercial International Bank," says Kamal, also tipping Orascom Construction Industries to extend gains.

Banks should play catch up, Kamal says, because they seem to be under-appreciated given their positive earnings outlook.

Telecoms, however, will continue to create the most intrigue as investors wait to see if Russian operator Vimpelcom succeeds in buying a controlling stake in Orascom Telecom.

"Orascom Telecom is undervalued," says Kamal. "We're hoping (a Vimpelcom acquisition) will bring a good premium in the telecom industry so the Egyptian market will gain confidence ... and not remain stagnant.

"Telecom Egypt will be the most to gain due to increased market share and probable organisational restructuring."