ABU DHABI: The UAE’s equity markets fell on Sunday in the first trade session this month, just a day after Standard and Poor’s cut Saudi Arabia’s credit rating on the back of lower oil prices and increasing budget deficits.
The Dubai Financial Market (DFM) index dropped 2.08 per cent to reach 3,430.93, while the Abu Dhabi Securities Exchange (ADX) went down 0.54 per cent to reach 4,298.72.
Trade values remained low, with Dh271.8 million traded in Dubai, and just Dh104 million traded in Abu Dhabi as investor sentiment remained negative.
Saleem Khokhar, head of equities at the National Bank of Abu Dhabi’s asset management group, said that investors were still looking for positive catalysts, with the earnings season coming to an end.
“[DFM] has taken the lead in terms of negativity, and it’s driven by the real estate and construction sector. The banking sector is not doing very well, although it’s not as negative as the real estate sector at the moment.
I think people are very much watching what’s happening within the region including Saudi and oil prices, which are important in setting the sentiment of investors,” he said.
While global equity markets are starting to see some recovery as many US and European markets recorded on Friday their biggest monthly gains in four years, investors in the GCC region are still leaning towards a negative bias.
“On the long term, once we get more clarity on GDP growth and oil prices, we will see trade volumes going up. It’s a difficult market at the moment,” Khokhar said.
Though analysts argue that valuations have been getting more and more attractive over the past few months, Khokhar said that investors still need external catalysts to drive demand for shares.
From a technical standpoint, Analyst Osama Al Ashry said in a note he expected the DFM index to slide towards its support level of 3,387, but said that falling beyond it was unlikely.
Al Ashry, a member of UK organization, Society of Technical Analysts, added that continued weak liquidity will create more pressure, pushing the DFM index down to new lows for this quarter.
In the capital, Green Crescent Insurance Company topped the gainers’ list with a 4.76 per cent increase, followed by Sudatel Telecom Group with 3.45 per cent, National Bank of Abu Dhabi with 1.72 per cent, and Agthia Group with 0.65 per cent.
Of the 35 stocks traded on DFM, 29 went down, and six went up. Of the 23 stocks traded on ADX, 14 declined, four advanced, and five remained unchanged.
