Trade values dwindle in UAE markets amid uncertainty

Tensions with Qatar, oil price instability weigh on investor sentiment

Published: 17:57 July 6, 2017

Sarah Diaa, Staff Reporter

Dubai: Trade values on the UAE’s stock markets dwindled on Thursday as the main equity indices fell nearly 0.5 per cent weighed down by uncertainty regarding oil prices and tensions with Qatar.

The DFM index ended the day 0.47 per cent lower at 3,401.15, with just Dh120.5 million in traded values, a plunge from the over Dh400 million traded in each of the past few trading sessions.

The Abu Dhabi Securities Exchange (ADX) general index slid 0.39 per cent to reach 4,396.35.

“I think medium- to long-term investors are waiting to see what’s going to happen in terms of developments in Qatar and their effects on regional confidence. Besides that, oil price direction is still not clear, so investors are probably pricing more downside for oil prices,” said Tariq Qaqish, managing director of asset management at Menacorp.

He added that he did not expect second-quarter financial results, which will start coming out next week, to show significant improvement in corporate earnings. Thus, there were no catalysts to drive stronger market performance in the short term.

On Thursday, oil prices rose nearly 1.5 per cent supported by strong demand from the United States. The price gains followed a drop of nearly 4 per cent a day earlier amid concerns on oversupply and higher exports levels.

A note from analysts at Union Bancaire Privee (UBP) said that “the uptrend has been reversed” in Brent crude oil prices after the first weekly closing price below $46.2 in 2017.

“Brent crude oil prices had seen five consecutive weekly losses and it is now nearly 20 per cent down year-to-date. The five-week negative closing has made it possible for a further move down towards the trendline support level in the downward channel at $39,” the note said.

UBP analysts added that there are indications of more room for the downside in Brent oil prices.

On the stock market front, GFH was the most actively traded stock on DFM in terms of value, with its share prices rising 3.33 per cent to Dh2.17. Arabtec share prices also rose 1.25 per cent, as Emaar slid 1.4 per cent, and Damac Properties fell 1.79 per cent.

In Abu Dhabi, where less than Dh100 million were traded, Dana Gas was the most actively traded stock, with its share prices down 1.43 per cent.

“I don’t see a clear trend for stock markets going forward. Oil  is unclear, and Qatari issues are escalating. However, valuations could be the next catalyst for investors after the summer and holiday period because valuations in the UAE are lower than those in emerging markets,” Menacorp’s Qaqish said.

On Wednesday, foreign ministers of Saudi Arabia, the UAE, Bahrain, and Egypt expressed regret over Qatar’s negative response to their list of demands. The four Arab countries last month announced they were severing diplomatic ties with Qatar, and put forth a list of demands they expected Qatar to meet.

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