DUBAI: Regional stocks joined the sell-off in global markets on Wednesday. The rout that was triggered by fading Trump Trades, which were spurred by hopes of tax cuts and pro-business government policies.

Saudi Arabia’s Tadawul index closed 1.16 per cent lower at 6,832.30. The Qatar exchange index closed 0.85 per cent lower at 10,395.98.

“The moves that saw in the US yesterday were sharp and unheard of in recent, and we saw a follow on selling in Asia as well and our markets saw some risk that was removed off the table by the traders,” Saleem Khokhar, head of equities at NBAD’s asset management group, told Gulf News.

On Tuesday, the US indices fell more than 1 per cent, the sharpest fall in five months, but failed to see a follow through selling on Wednesday.

The Dow Jones Industrial Average was down 0.32 per cent, while the S&P 500 index was down 0.24 per cent at 6:30pm UAE time.

The MSCI emerging market index fell 0.88 per cent at 964.56. The Asia Dow Index fell 1.65 per cent lower to 3,232.11.

However, the downside in the UAE stocks was limited.

“We need to take into account how our markets have behaved compared to international markets. We have been on a weaker side for a little, so the reaction to the sell-off has been muted,” Khokhar said. The Dubai Financial Market General Index closed 0.58 per cent lower at 3,474.73. The Abu Dhabi Securities Exchange general index closed 0.69 per cent lower at 4,481.89.

“Now, attention will turn to Thursday’s crucial vote on repeal and replace Obamacare, and failure to pass this would prove difficulty in passing the tax and spending reforms,” said Naeem Aslam, chief market analyst with Think Markets.

Realistic expectations

Valuations are reasonable in the regional markets compared to the US.

“We got very realistic expectations for regional markets, and that has been impacted by the oil price. We are in a reasonable valuations terittory,” Khokhar said.

The UAE stocks were valued at a PE multiple of 11 times, while Qatari stocks were valued at 14 times, and Saudi stocks were at 17 times of PE multiple. However, global markets are over-valued. For example, the US markets are valued 20 times to PE multiple.

“There is a valuation gap between international and regional markets. We have a cushion in terms of valuations buffer, so it’s not necessary that we would directly follow the international markets,” Khokhar added.

Commodities

Brent crude fell towards $50 per barrel on rising US inventories. It was down 1.26 per cent at $50.32 per barrel on Wednesday, after dropping to $50.05, its lowest level since Opec announced on November 30, 2016, its plan for cuts. West Texas Intermediate was down 1.24 per cent at $47.6 per barrel.

Spot gold was up 0.27 per cent at $1,247.90 an ounce. The dollar index fell below the keenly watched 100 mark. The index was almost steady at 99.77.