Middle East stock markets look set to remain under downward pressure on Monday as oil prices hit fresh 6-1/2 year lows and Asian bourses slumped in what one Japanese analyst likened to the 1997 Asian financial crisis.
By some technical measures, major Gulf markets are very oversold for the short term and ripe for a rebound. Dubai's index, which plunged 7.0 percent to 3,451 points on Sunday in indiscriminate selling, is near major technical support on the March low of 3,233 points, a logical place for a rebound.
Saudi Arabia's benchmark, which lost 6.9 percent to 7,463 points on Sunday, bringing its losses this month to 18 percent, is near chart support on its December low of 7,226 points.
With an average forward price/earnings ratio of near 11 times, United Arab Emirates markets are attractively valued in historical terms. Even Saudi Arabia no longer looks expensive.
But the depth of the global market slide will make it hard for investors to buy back Gulf stocks with any conviction.
MSCI's broadest index of Asia-Pacific shares outside Japan is down about 5 percent in Monday trade and S&P 500 mini futures suggest Wall Street will open sharply lower.
"Markets are panicking. Things are starting to look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable," said Takako Masai, head of research at Shinsei Bank in Tokyo.
Brent oil is down 2.1 percent to $44.52 a barrel, which may trigger fresh rises in U.S. dollar/Saudi Arabian riyal forwards and Saudi credit default swaps, adding to the jitters in Riyad's bourse.
Egypt lowered its top tax rate and the threshold for companies and individuals in high income brackets on Sunday and suspended a 10 percent tax on capital gains.
The measures had previously been announced but the fact that the government has finally gone ahead with them is likely to be seen as positive by investors, who had been concerned by the slow pace of reforms.
However, the news may for now fail to trigger any rally in Cairo given the poor global backdrop and worries that sliding markets in the Gulf may hurt Egypt's trade, investment and aid ties with the region.