Business | Markets
Bears hug stock markets in the Gulf
A substantial foreign sell-off followed by "panic" selling by local investors led to the market falling for the second straight day in the UAE.
- By Gaurav Ghose, Financial Features Editor
- Published: 23:22 August 11, 2008
- Stock traders keep a close watch on the prices in Abu Dhabi.
- Image Credit: Ahmed Kutty/Gulf News
Dubai: A substantial foreign sell-off followed by "panic" selling by local investors led to the market falling for the second straight day in the UAE.
UAE markets fell a combined 4.83 per cent, with Abu Dhabi Securities Exchange Index tumbling 178.31 points or 3.83 per cent to close at 4,474.11. The Dubai benchmark edged one per cent lower to close at 5,043.74.
The capitalisation of the two markets fell by Dh22.17 billion yesterday, taking the two-day total to nearly Dh44 billion.
With the exception of Saudi Arabia, which closed higher on Monday after a 3.55 per cent drop on Sunday, the trend was no different in the region's other markets.
Oman witnessed the highest drop, plunging 5.72 per cent to end at 9,536.73. Bahrain, Qatar and Kuwait fell 0.80 per cent, 2.46 per cent and 0.90 per cent respectively. Saudi Arabia rose for the first time in four days, climbing 2.33 per cent to 8,067.62.
In Abu Dhabi, the major sell off in stocks such as Aldar Properties, Sorouh Real Estate, First Gulf Bank that was initiated by foreigners on Sunday continued yesterday, but towards the end of the session there was a little bit of buying of stocks such as Sorouh.
First Gulf Bank fell for the sixth straight session, declining 9.46 per cent to Dh21.05. Aldar closed 6.10 per cent lower to Dh10.00 and Sorouh dropped 3.43 per cent to close at Dh7.60.
In Dubai, Emaar dropped 1.49 per cent to Dh9.90, its lowest close in about a year.
The other major losers included Dubai Financial Market Company, dropping 5.84 per cent to Dh3.87, Tamweel declining 2.31 per cent and du losing 3.46 per cent. Arabtec and Emirates NBD were among the gainers, closing 1.29 per cent and 0.43 per cent up to close at Dh15.65 and Dh 11.55.
"A combination of factors has resulted in this sell-off - it's the sort of traditional quiet period when trading is low. Company results were out which didn't really drive the market forward as they should have, on going geopolitical tensions, and last week's Morgan Stanley's report which was a bit negative on the real estate sector - so in such a scenario, with foreign investors selling off, the locals start panic selling," said Anne Marie Browne, foreign institutional sales, Al Futtaim HC Securities.
Healthy correction
"Global markets have turned around in the last couple of days and today Asian markets were up too, so may be the foreigners here are closing positions here to invest over there," Browne added.
Oman witnessed heavy selling by foreigners, a trend for the last week. Some see this as a healthy correction, in a market that is up 18.8 per cent (till July 31), and has been one of the best performing bourses in the region this year.
"May be the foreigners are just wanting to cash out of the good returns that we have been seeing up to now - for the year they have been very much the net buyers," said Sayyid Wasfi Jamshid Al Said, deputy general manager and head of investment banking at National Bank of Oman.
"With minimum reserve requirement raised, some of the stocks in the banking sector started to come under a little bit of pressure. Apart from that, oil price coming down quite sharply, seem to have affected investor sentiments."
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