Dubai: Volatility is expected to continue in the UAE markets in the short-term, however the long-term positive trend is still intact, market experts said on a day when the Dubai index fell the most in the GCC region.

“There is a lot of volatility and this will continue for sometime until we see some stability in world markets and crude oil. But this won’t change our long term positive view,” said Mousa Haddad, fund manager at National Bank of Abu Dhabi Asset Management.

“We will have to be selective and cautious in the market. We don’t want to catch a falling knife,” said Haddad.

Global shares fell to a six-month trough early on Friday as concern about a recession in Germany deepened after sources in the ruling coalition said Europe’s largest economy would next week cut its growth forecasts for 2014 and 2015.

Equities worldwide have lost about $4.4 trillion (Dh16.2 trillion) in value since reaching a record last month. Minutes of the Federal Reserve’s September policy meeting last week showed officials are concerned the US economy may be at risk in a global slowdown.

The International Monetary Fund last week reduced its forecast for global growth next year to 3.8 per cent, from a July prediction of 4 per cent. Crude oil fell to its lowest level in nearly four years last week pressured by ample supplies and expectations of weak demand.

The Dubai Financial Market (DFM) General index has been the best performing in the Gulf region and the second best performer in the world, with 40.19 per cent gains mainly on the back of strong economic fundamentals and a solid recovery in the real estate market.

On the Dubai index on Sunday, out of a total of 36 shares traded on the exchange, shares of 33 companies declined, shares of 2 rose, while shares of the rest remained unchanged.

Elsewhere in Abu Dhabi, the general index ended 3.50 per cent lower at 4,899.67. Out of a total of 38 companies, shares of 7 companies rose, while 29 of them declined and the other 2 remained steady.

Results key

Analysts said the short-term outlook for markets will be dictated by third quarter results, which are slated later in the month.

Banks in the UAE are expected to deliver strong year-on-year growth in profits in the third quarter of 2014, despite muted loan growth and across-the-board margin compression experienced by the sector.

Credit rating agency Standard and Poor’s expect around 8–9 per cent credit growth for the sector in 2014-2015, in line with healthy economic activity driven by strong government spending, and non-oil private sector growth.

Banks and real estate companies’ has maximum weightage on the DFM General Index.