Stock price information displayed in the Saudi Stock Exchange, also known as the Tadawul, in Riyadh. Foreign investors bought more Saudi stocks in March than ever before. Image Credit: Bloomberg

Dubai: If you think that a sell-off in regional markets was good enough to resort to bargain buying, think again. The Dubai Financial Market General index closed 1.97 per cent lower at 2,755.32, and has shed 18 per cent in the year to date.

This makes it the worst performer in the region.

“Outlook remains sluggish and cautious, there is plenty of valuable gems laying around,” Issam Kassabieh, Senior Financial Analyst at Menacorp said. “However, it is too hot to pick anything up right now because there could be more downside as interest rates increase,”

The risks are many — in terms of global trade, Brexit and volatile oil prices. On Thursday, most of the stocks in Dubai saw sharp falls with 3-5 per cent losses. Dubai Islamic Bank closed 1.87 per cent lower at Dh5.25; DP World closed 0.75 per cent down at $18.50; and Emaar Properties 2.8 per cent lower at Dh4.88.

Salama Insurance, which was up 4 per cent at Dh0.661, was the most active stock by contributing 24 per cent of the total traded value of Dh251 million.

 "We are neutral on Saudi [Arabia] until we see some more tangible evidence of a significant increase in fiscal spending."

 - Zaid Alasad | Chief Investment Officer, Harbour Wealth Management


The Abu Dhabi Securities Exchange general index closed 0.93 per cent lower at 4,967.77. The index has gained 12.94 per cent so far in the year, making it the best regional performer. However, traded value remained mild, with shares worth Dh176 million changing hands.

“In the short term, local and regional markets are likely to be quite volatile,” Charles Henry-Monchau, Managing Director, chief investment officer and Head of Investment Management at Al Mal Capital said. “The best strategy to follow in such circumstances is to stick to companies with strong fundamentals as they are expected to re-rate quickly once they announce their third-quarter results.”

The third-quarter results have been trickling in with Dubai Islamic Bank witnessing better than expected net profits.

Saudi Arabia’s Tadawul index closed 3.88 per cent lower at 7,530.80, leading regional losses. The index, which gained 4.21 per cent since the start of the year, had been on a recovering mode on the back of strong prices of oil.

“We are neutral on Saudi until we see some more tangible evidence of a significant increase in fiscal spending,” said Zaid Alasad, Chief Investment Officer, Harbour Wealth Management. “The problem is that Saudi Arabia is experiencing monetary tightening at the wrong time due to the riyal’s peg to the US dollar. The one thing keeping the Saudi markets afloat is the higher oil prices.”

On Thursday, all the major sector indices were hit. Energy, materials, and consumer services were the worst hit. Saudi Basic Industries Corp. closed 5.07 per cent lower at 116.20 Saudi riyals. Alinma Bank was 3.28 per cent lower at 20.62 Saudi riyals. In other markets, the Muscat MSM 30 index closed 0.42 per cent lower at 4,489.76. The Qatar exchange index was 1 per cent lower at 9,861.53.