x Abu Dhabi, UAESaturday 20 January 2018

Global uncertainty making UAE investors cautious

Gulf investors continue to stay their hand as world markets yo-yo, with Qatar the only substantial outlier.

Traders on the floor of the Dubai Financial Market stock exchange. Nicole Hill / The National
Traders on the floor of the Dubai Financial Market stock exchange. Nicole Hill / The National

The uncertainty haunting world markets is staying the hands of many investors in the UAE. Markets are poised to forgo the usual bounce in the first week of trading after Ramadan unless a big rally materialises today. The Dubai Financial Market General Index rose 0.3 per cent to 1,491.08, while stocks on the Abu Dhabi Securities Exchange General Index fell 0.2 per cent to 2,598.71.

Traders remained on the sidelines yesterday as signs of local growth proved elusive, causing volumes to remain in the doldrums on local exchanges. In past years volumes have bounced significantly after the end of Ramadan.

But instead of a customary rally, markets were experiencing a sense of "post-Eid blues", Gary Dugan, the chief investment officer of private banking at Emirates NBD, wrote in a report.

Precipitous stock market swings were driving investors to perceived havens that would hold their value in the event of wider market sell-offs, said Yazan Abdeen, a fund manager at ING Investment Management.

"The only outperformer is Qatar, driven by the banking sector," he said. "They're becoming aligned with defensive plays."

Banks including Masraf Al Rayan, Qatar Islamic Bank and Doha Bank made the biggest gains on the QE Index, which rose 0.6 per cent to 8,398.28.

World equity markets rebounded from losses earlier in the week, with the FTSE Eurofirst 300 index up 2.3 per cent to 924.96 following a strong day of trading on Asian markets.

But the sharp swings in the value of stocks is unnerving many. The VIX index, also known as Wall Street's fear gauge for its measure of volatility of US stocks, is hovering around levels not reached since the financial crisis in early 2009.

Oil futures rose slightly in trading yesterday, with Brent crude futures up 74 cents to US$114.42 per contract.

Elsewhere in the Gulf, Oman's market fell, but Kuwait and Saudi Arabia made gains.