UAE stock markets still remain nervy

Dubai Financial Market (DFM) extended decline on Wednesday, as investors remained stressed and looked for direction following the fall on global stock markets seen on Tuesday and subdued trading on Wednesday.

The index shed 17.66 points or 1.04 per cent to close at 1,673.82.

Out of 26 stocks traded, only four managed to advance, namely Al Salam Bank Sudan, Commercial Bank of Dubai, DP World, and Takaful House.

Air Arabia, Emaar, Hits Telecom, Arabtec and DFM, however emerged as volume toppers.

Abu Dhabi Securities Exchange (ADX) also closed flat at 2,755.87, marginally up by 0.06 point.

Lukewarm investor response emanated from mixed performance of Asia-Pacific markets. Major indices like BSE 30, Seoul Composite, Nikkei 225, Jakarta Composite and Taiwan Weighted were trading low as per the latest data, following reports of clashes between North and South Korea on Tuesday. European markets however look stabilized on Wednesday.

"Concerns over global factors still remain the key determinants of the markets' movement globally, including in the UAE. Additionally, the US markets closed weak on Tuesday that further put pressure on the global market's performance on Wednesday," Chahir Hosni, Sales Manager (MENA equities), EFG Hermes told Emirates 24|7.

Further, he said, Wednesday is the last trading day of the week in the US and the markets would remain closed for two days on the occasion of Thanksgiving Day. That means in the backdrop of the global geo-political tensions, concerns over European debt situation, and clashes between the two Koreas, it would be uncomfortable for traders to have open positions before the US holidays.

That's why most markets were down on Tuesday and many European and Asia-Pacific markets are trading low even on Wednesday. This global weakness is reflecting on the UAE markets as well, he added.

Going forward, when the global markets start stabilising, that would give support to the local markets as well. Since there's a lack of local catalysts the local market looks for direction from global stock markets. When there is enough domestic catalyst, the UAE bourses are likely to look more at the local catalysts than global ones for direction, he said.

Bank of America-Merrill Lynch in its latest global weekly research report, 'Economic rehab or relapse?' said: "Absent a major shock, we expect the global economy to slowly recover. "

While in a normal economic recovery downside risks fade over time, almost a year and a half into this recovery the list of risk factors has not gotten any shorter, it said, adding: "Investors should keep a close eye on policy events in the coming weeks."

"If Europe devises a comprehensive bailout plan, it could create an extended period of calm. If it adopts a piecemeal solution focused only on Ireland, we think another round of crisis is very likely," the report said.

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