Emerging market blues hit stocks

With foreigners selling off on the back of the emerging markets worries, margin calls were triggered in Saudi Marie Salem, Director of capital markets at FFA Dubai

dubai — Saudi Arabia’s main stock index fell below major technical support for the first time this year on Wednesday, leading declines in Middle East stocks as the region was swept up in a broader emerging markets sell-off.

Investor sentiment was gloomy across emerging markets, with the MSCI emerging market index down 1.3 per cent as a result of worries about a potential escalation in the US-China trade conflict and the health of emerging markets.

Saudi Arabia’s stock index dropped 3.9 per cent in late trade, falling below its 200-day average for the first time this year. The index closed 3.1 per cent down.

“With foreigners selling off on the back of the emerging markets worries, margin calls were triggered in Saudi,” said Marie Salem, director of capital markets at FFA Dubai.

Blue chip names which have surged in recent months on expec- tations of foreign fund inflows were hard hit, with Saudi Basic Industries Corp closing 4.4 per cent and Al Rajhi Bank falling 3.0 per cent.

Investors also fretted about a retreat in oil prices.

First Abu Dhabi Bank, the largest bank in the UAE, acted as the biggest weight on Abu Dhabi’s index, dropping 2.8 per cent. Abu Dhabi Commercial Bank dropped 4.6 per cent. It said on Monday it was in early merger talks with Union National Bank and separately with unlisted Al Hilal Bank.

UNB added to double-digit gains on Tuesday to rise a further 11.7 per cent, reflecting analysts’ expectations that it will gain the most from a potential merger.

The Abu Dhabi stock index fell 1.1 per cent. In Dubai, Emaar Properties was the main drag on the index, with the stock falling 1.8 per cent. The emirate’s index slipped 0.7 per cent.

Egypt’s main index slipped 1.1 per cent.

In early trading, France’s CAC 40 fell 1.2 per cent to 5,280.68 points and Germany’s DAX lost 0.7 per cent to 12,118.98. London’s FTSE 100 shed 0.5 per cent to 7,420.91.

The Shanghai Composite Index lost 1.7 per cent to 2,704.34 and Tokyo’s Nikkei 225 retreated 0.5 per cent to 22,580.83. Hong Kong’s Hang Seng dropped 2.6 per cent to 27,243.85 and Seoul’s Kospi declined 1 per cent to 2,291.77. Sydney’s S&P-ASX 200 shed 1 per cent to 6,230.40 and India’s Sensex was 0.8 per cent lower at 37,829.13. —