Dubai: After most of the stock markets in the Middle East ended last week on a positive note, trading on the Dubai bourse’s main index is expected to be subdued this week, just as renewed scepticism over an eminent US-China trade deal pushed global stocks into the red.
Emaar Developments, one of the biggest real-estate developers in Dubai, on Thursday was removed from one of the world’s most popular emerging-market benchmarks — the MSCI Emerging Markets Index.
“We expect this weakness to continue to weigh on the market this week,” said Mohamad Al Hajj, head of MENA Equity Strategy for EFG Hermes, adding that the current drag from discounted trading of the Emirates NBD rights issue is expected to persist in the coming days. “We could still see this [ouster from index] lead to combined investment outflows of about $105 million,” he added.
Damac Properties PJSC’s stock has plunged by about two-thirds in the past 12 months, while Emaar Development PJSC have dropped 25 per cent. Emaar Malls’ shares bucked the trend, ending largely unchanged despite volatility during the period.
The performance of these real estate giants had set them up for exclusion from the MSCI Emerging Markets index in May, according to analysts, but only Damac was excluded in the month then. That is, until the exclusion of Emaar Developments on Thursday.
Apart from the MSCI factor, analysts believe that ongoing talks between the US-China on trade tariffs is sending mixed signals to the markets and are leading to the dampening of marketwide sentiment.
More trade scepticism
US President Donald Trump on Friday denied he had agreed to lift the tariffs on China, a day after contrary statements from a Chinese government spokesperson, adding to uncertainties on whether the world’s top two economies were really getting close to signing a partial deal.
The comments from China pushed the markets sharply higher on Thursday, but Trump’s lacklustre comments the day after pushed shares back down, dampening hopes that the months-long trade war would soon be resolved. “The worries rose over further delay in signing the trade pact, as contradictory statements from both countries have weighed on investor sentiment,” analysts at First Abu Dhabi Bank Securities wrote in a note.
European markets ended in the red, so did Asian markets, but US markets closed positive after a choppy session.
The details of the much-awaited Aramco IPO remained meagre.
The Saudi state oil giant released a 600-page prospectus, which flagged risks and provided very little details on the size of the offering. It will sell 0.5 per cent of its shares to individual retail investors, the prospectus revealed, and the government will have a lock-up period of a year on further share sales after the IPO.