UAE calm as Arab markets lose $30bn

 

  

The two main bourses in the UAE have restored their balance following a week of turbulence that gripped most Arab stock markets and cost the region nearly $30 billion (Dh110.17bn), according to official figures.

 

Dealers said they expected the UAE market to remain relatively calm in the next few weeks as investors’ fears dwindle and the bourse recovers most of its losses suffered over the past week because of a panic sale of shares.

 

The Abu Dhabi and Dubai bourses shed billions of dollars in just a few days before they regained most of the losses by the end of the week following a fresh wave of speculation caused by huge sales of shares by two foreign investment funds.

 

“I know it was a week of turbulence in many regional markets particularly in the UAE, which is becoming more and more sensitive,” said Ziad Dabbas, share dealing adviser at the government-controlled National Bank of Abu Dhabi. “The turbulence was caused by a surge in speculation and panic sale of shares after two foreign investment funds began selling a large part of their shares… this created panic among investors who mistakenly saw the move as a foreign capital flight… this in turn created a psychological link between our market and global markets although we have said many times they are not linked in any way.”

 

Dabbas noted that between 2006 and 2007, the UAE stock market jumped by nearly 50 per cent while there was an increase of about 6.5 per cent in Dow Jones index, 8.6 per cent in Nasdeq and 3.5 per cent in Standard and Poor’s.

 

“This shows there is no exposure or connection between our markets and international markets… but the problem is that the market here, as well as the Saudi market, are among the most speculative in the region and this always create unnecessary turmoil. For this reason, I believe the UAE market has now restored its balance… it will be relatively calm in the next few weeks and continue to grow on the basis of high oil prices, strong economic performance, high liquidity and good performance of listed companies.”

 

After losing in excess of $5bn through the week, Abu Dhabi and Dubai bourses regained most of the losses by Thursday while the markets of Qatar, Kuwait, Oman, Egypt and Jordan emerged as the main losers in the region.

 

The market capitalisation of Abu Dhabi closed even higher on Thursday at about $117.18bn compared to $117.06bn on March 22. Dubai’s capitalisation slipped to about $131.16bn from $132.3bn during the same period, according to figures by the Abu Dhabi-based Arab Monetary Fund (AMF), which tracks the performance of the 15 formal Arab stock exchanges.

 

The figures showed the combined Arab market capitalisation (excluding Morocco, which provided no figures) declined by nearly $30bn to $1.294 trillion on Thursday from about $1.324trn on March 22. The bulk of the loss was suffered by Kuwait and Egypt ($9bn each), Qatar ($5bn), Oman ($4bn) and Jordan ($3bn).

 

Saudi Arabia’s Tadawul exchange, the largest in the Middle East, slipped by $1bn while Bahrain recorded a slight decline and the markets of Tunisia and Palestine remained almost unchanged.

 

 

BEARISHNESS PREVAILS ON BOURSES

DFMGI ended on a weak note with a continuous fall for the past five weeks and could not give any breakout on the downward channel resistance. The rise seen on Tuesday from lower levels of 5,296 was also neutralised by the Doji formation on Wednesday, and bears again were in full command to bring the index down to close at 5,404.68 For any bullishness to be seen in the market, bulls have to close the index above the resistance levels of 5,515. The long-term trend for the market remains bullish.

ADSM has formed a tweezer bottom, a bullish signal that makes the support of 4,554 stronger. The market has its resistance at 4,678 area and any breakout on this resistance will show a rally until the next trend line resistance at 4,800. Compared to DFM, ADSM has performed better and is staying above supports closing positive for this week at 4,665.25, and one must be cautious on the break of 4,554 support zone. Intraday the supports exist at 4,646 and 4,628 and the resistance is at 4,678 and 4,700.

Arkan Building Material Company gave a nice breakout on the day chart on Thursday, closing at Dh3.97. If it maintains above Dh3.70 areas, then we are going to see the rise until Dh4.34 and crossover of this resistance will take this stock from Dh4.50 to Dh5 near term.