Dubai: A week after equities worldwide were pushed deeper into the red on woes over timing of an imminent US-China trade truce, with the added pressure of roiling protests in Hong Kong worsening relations between the top two economies, another weak week is on the horizon.
Sentiment took a hit after it was reported that Washington and Beijing were unlikely to reach a trade deal this year, and that US President Donald Trump was seen likely to legislate a bill which warns China against violently suppressing the protests in Hong Kong.
However, an upbeat US economic data released on Friday and hopeful messages from Chinese President Xi Jinping and Trump helped ease the fresh tensions over the protracted trade war. Wall Street Journal reported earlier China had invited US trade negotiators for a new round of face-to-face talks in Beijing.
“A lot of discussions are about when and how a phase-one deal will be signed. I think it will be signed and we are still pretty constructive about that. It should be done before the December 15 deadline for the next round of tariffs,” said William Hess, Co-CEO at Beijing-based PRC Macro Advisors.
“Neither country wants to hit that tariff wall. We’ve seen what happened over the summer, the reverberations that happened in the financial markets, and we don’t think that either side wants to revisit that,” Hess added.
Analysts expect this week to be another few days of trade-sensitive trading.
“Global equities continue to be driven by trade headlines as conflicting signals continue to emerge,” wrote Aditya Pugalia, Director of Financial Markets Research at Emirates NBD. “The focus this week will continue to remain on trade headlines.”
“Further, investors will also watch out for comments from the Fed Chair Jerome Powell, his first since his meeting with the US President.”
Local markets too ended last week on a sour note. UAE bourses ended lower with the Dubai Financial Market (DFM) index losing 0.6 per cent and Abu Dhabi’s ADX index dropping 1.9 per cent last week.
“Regionally, investors will be keenly tracking the progress of Saudi Aramco IPO,” Pugalia added. “It appears that investors are expecting banks to benefit from being able to give enhanced leverage to retail investors for Saudi Aramco IPO.”
Saudi Aramco met investors in Dubai on Sunday to market its IPO, Reuters reported, after trying to secure demand from Kuwait’s sovereign wealth fund for the deal, which relies heavily on local and regional buyers.
Arabtec fell 27.7 per cent last week, declining ever since the company posted its biggest quarterly loss since 2016, casting doubt over the firm’s ability to pay dividends in 2019.
Emaar-related stocks too remained under pressure. Emaar Properties fell for a fourth consecutive week and slipped about 1 per cent last week. Emaar Development declined 7 per cent, while and Emaar Malls fell 2 per cent.