DUBAI - Investors were in a selling mood on
most Gulf Arab markets on Tuesday, as the previous day's gains
were mostly cancelled out.
Analysts predict the volatility in regional bourses to
continue, as the markets correct after a rally which preceded
third quarter reporting season.
Dubai's index slumped 5 percent for the second time
in the week, after surging by the same percentage on Monday, its
largest one-day gain since February.
"Generally speaking the outlook for shares is still in
doubt," says Chamel Sahmy, regional senior sales trader at
Beltone Financial.
"There are still a number of fronts that could deteriorate.
The correlation with international markets is affecting our
performance and volatility will persist."
Real estate and related stocks were the main drag on
benchmarks in Dubai and in Abu Dhabi. Bellwether Emaar
Properties slumped 7.3 percent and Arabtec declined 6.2 percent.
In Abu Dhabi, Aldar Properties fell 4.9 percent.
"The volumes were not bad. But the market is correcting,
and it will take some time," said Moussa Haddad, head of Middle
East equities desk at National Bank of Abu Dhabi.#
"We are likely to see a very volatile month. However, long
term investors should be holding positions, and will be waiting
for end of year results."
Index heavyweights and financials were the main drag on the
Saudi benchmark, Saudi Basic Industries Corp declined 3.9 percent, and Al Rahji bank, the
country's largest listed lender, fell 2 percent.
"Some people are still wondering about the profitability of
for example financial institutions, whether they are
sustainable," said Jithesh Gopi, head of research at Sico in
Bahrain, adding that the broader global sentiment is also
affecting regional investors.
Although the U.S. markets closed higher on Monday, one
factor for some panic-selling seen on Gulf bourses, especially
towards the end of the session, was likely to be negative banks
data out of Europe.
News that U.S. stock index futures fell in early Tuesday
trading as a result, may also weigh on Gulf benchmarks on
Wednesday.
Benchmarks in Qatar, Kuwait and Oman all retreated on Tuesday, but Bahrain's index bucked the
regional trend and rose 0.2 percent.
"Long-term investors are staying on the sidelines, they are
very cautious about taking new positions in the markets,"
Beltone's Sahmy said.
TRADING HIGHLIGHTS
In Dubai, the benchmark fell 5 percent to 2,075 points
Abu Dhabi's measure declined 1 percent to 2,948 points.
In Saudi Arabia, the index retreated 1.4 percent to 6,283 points.
Qatar's benchmark dropped 1.4 percent to 6,933 points
In Kuwait, the index fell 0.2 percent to 7,242 points.
Muscat's measure eased just 0.02 percent to 6,329 points.
Bahrain's benchmark edged higher 0.2 percent to 1,508 points.