UAE stock markets will stay calm after Eid break

Dubai: UAE stock markets, which are scheduled to resume trading on Sunday after the Eid holiday, should remain relatively unaffected by worrying global financial news that dragged down international markets in the last few days, an analyst said.

"When the markets open they might be on the weaker side. But I would be surprised to see a major sellout," Fadi Al Saeed, senior fund manager and head of equities in the Middle East and North Africa region for ING Investment, told Gulf News.

This week saw investors' concerns that China is going to increase interest rates to curb the country's rising inflation and indebted Ireland may seek a bailout from the EU.

"You have to put everything in perspective. When we first heard the news about Greece's [bailout], it was the first time we had to deal with such news so the reaction was very strong. However, when the markets open on Sunday it will be a second reaction so it won't be as strong."

Stocks in the US, Europe and Asia, with only few exceptions like Japan, have been dropping in the last few days. The Dow Jones industrial average briefly fell below 11,000 for the first time since mid-October.

The Shanghai composite index fell almost 6 per cent in the last two days as investors worry that Chinese authorities' intervention to control consumer prices might effect world demand.

"We are seeing deliberate actions by Chinese government to slow inflation so I don't see it as a bad thing. The reason why they're doing that is because the QE2 [second round of quantitative easing by the Federal Reserve to pump fresh money into the economy] will see a lot of liquidity and China is just trying to counter balance that and maintain growth," said Al Saeed.

European shares posted their lowest close in two weeks on Tuesday and remained jittery on Wednesday on worries about the EU's hesitance on the Ireland bailout came as investors feared that the debt crisis might spread to other countries in Europe.

"In regard to the news about the Ireland issue, we've been hearing about it for a while now so the market was ready for that. They're meeting on Thursday so that might top the markets up," said Al Saeed.