Dubai bourse hits 5-year low before paring losses

dubai — UAE stocks remained under pressure on Monday, with the Dubai bourse hitting a 5-year low but recovering some of the losses later in the day as a sharp sell-off witnessed globally last week continued to affect the markets.

The Dubai Financial Market fell as low as 1.6 per cent in the midday before recovering to close 0.74 per cent lower at 2,460 points. The Dubai bourse was dragged down by Arig, Emirates NBD and Dubai Financial Market scrips.

Union Properties gained 5.3 per cent after saying it would hold a board meeting on Thursday to consider buying back 10 per cent of its shares in order to resell them later.

The Abu Dhabi Securities Exchange traded in the negative territory most of the day but recovered later to close the day’s trading flat at 4,817.5 points.

Saudi Arabia’s Tadawul index recovered Sunday’s losses to close 0.4 per cent higher at 7,762 points as banking shares were largely stable after some dropped on Sunday in response to news of a deal with tax authorities.

Vijay Valecha, chief market analyst, Century Financial, said the UAE stocks fell on Monday on account of the sharp sell-off in global equities in the preceding week which was sparked by slowing global economic growth projections for 2019 as well as a more hawkish US Federal Reserve.

“The rise in US interest rates also triggered a rate hike by the Central Bank of the UAE earlier this month which caused investors to drift away from UAE equities. The decline in oil could have been an additional pressure point. With global markets under a bear grip, we don’t see UAE markets turning around in the near term. Only a dovish Fed or resolution to US-China trade imbroglio can give markets a reprieve,” Valecha said.

Shailesh Dash, board member, Allied Investment Partners, said UAE stock markets began this year on a positive note but the market saw a number of economic challenges such as the implementation of value-added tax (VAT) at the beginning of this year which affected several businesses and therefore the business sentiment.

In addition, tightening monetary policy, strong dollar and the decline in fuel prices discouraged investors to enter the markets at this point of time, he said.