MIDEAST STOCKS-Oil at $52 may buoy sentiment, MSCI changes to impact some stocks

DUBAI, May 16 (Reuters) - A further climb in crude oil prices may help buoy sentiment towards Gulf equity markets on Tuesday while a series of index changes by MSCI looks set to affect a few individual stocks.

Brent oil is trading at $52 a barrel in early Asian trade and has now traded over the $50 mark for four sessions.

“Sentiment is not the only thing that gets dented when oil falls below $50 for a prolonged period - now it is the wider economic reforms that will get hurt, because the catch is that to diversify from oil, you still need it at a comfortable level,” said a London-based analyst.

Overnight MSCI said it would add Dubai developer DAMAC Properties to its United Arab Emirates index on June 1. Analysts at EFG Hermes estimated last month that at least $90 million of passive fund inflows could enter DAMAC; these are not expected until just before the change actually takes place on June 1, but some investors could try to front-run the change.

Dubai’s Gulf General Investment will be deleted from MSCI’s small-cap index while Qatar’s Gulf Warehousing will be added.

MSCI also said it would add investment bank and brokerage firm EFG Hermes to the MSCI Egypt index while deleting real estate developer Talaat Mostafa; analysts at EFG estimated flows of around $30 million as a result.

Dubai builder Drake & Scull, which is near a 15- month low, reported a first-quarter net loss attributable to shareholders of 722.5 million dirhams ($196.9 million) versus a profit of 9.8 million dirhams in the year-ago period.

However, fresh selling of the stock may be limited as a quarterly loss had been expected and some investors are now focusing on the firm’s efforts, outlined in a Reuters interview last week, to rebuild its business and obtain overdue payments from client Saudi Aramco. (Reporting by Celine Aswad; Editing by Andrew Torchia)