Dubai: The UAE’s main stock indices continued sliding on Tuesday amid growing concerns on a possible trade war.
The Dubai Financial Market (DFM) index fell 1.45 per cent to end below the 3,000 mark for the second day in a row, at 2,939.33, as most stocks ended in the red. The Abu Dhabi Securities Exchange (ADX) general index, which a day earlier fell around 2.7 per cent, ended 0.58 per cent lower at 4,561.64.
The decline in the UAE came as Asian stocks sank, with China’s benchmark equity gauge falling as much as 5 per cent, after the US ramped up trade tensions with China. President Donald Trump on Monday evening announced plans to impose 10 per cent tariffs on additional $200 billion worth of Chinese goods if Beijing doesn’t bend to US demands.
Charles-Henry Monchau, managing director of investment management at Al Mal Capital in Dubai, added that the weakness in local markets was also attributed to redemptions facing emerging market ETFs (Exchange-Traded Funds).
Investors are pulling money out of emerging market funds as rising interest rates in the US weaken emerging market assets, Bloomberg reported.
“The US-China trade war is another global factor at play,” Monchau said.
On the DFM, blue chip Emaar saw its share prices fall 5.16 per cent to Dh5.15, with the stock being the most actively traded in the market, accounting for nearly 23 per cent of total trade.
Air Arabia, which on Monday dove over 7 per cent over concern that it has investments with Abraaj, the private equity group which filed for liquidiation on Friday, ended flat on Tuesday. Dubai Islamic Bank ended 0.79 per cent lower.
“Overall, we remain positive on UAE equities. From a macro standpoint, the Dubai and UAE story remain very compelling,” Monchau said. “As we approach the Expo 2020, government spending should stimulate both infrastructure spending and the private sector activity, leading to a multiplier effect.”
