Global stock markets are subdued due to a heightened sense of risk aversion. The UK, France, Italy and Spain reported the highest numbers of coronavirus cases since the first wave of infections and this may trigger localized lockdowns.
European shares are also downcast on account of a no-deal Brexit prospect. UK Prime Minister Boris Johnson has been upping the rhetoric against the EU in recent days. Nonetheless, UAE equities have taken a break from their Western counterparts and performed strongly - DFM gained 0.73 per cent while ADX closed higher by 0.26 per cent.
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Insurance companies had a good day - Dubai Islamic Insurance and Reinsurance shot up 14.91 per cent, Dar Al Takaful rallied 14.89 per cent, Abu Dhabi National Takaful Co gained 14.95 per cent, and Methaq Takaful by 3.91 per cent. Methaq Takaful shares were supported by its statement that the board of directors has not issued any approval on the acquisition of Eshraq Investments and hinting it was not making any move in this regard.
A second wave of virus is not likely to impact UAE economy severely as most countries have accepted this as the new normal. This is good for the UAE's non-oil economy, which is dependent on trade and tourism to a large extent.
- Vijay Valecha is Chief Investment Officer at Century Financial.