The selloff of Middle East stocks sparked by the Iraq crisis continued apace yesterday, led by a second consecutive fall of more than 3 per cent on the Dubai Financial Market.
All of the region’s stock markets closed yesterday in the red with the exception of the Muscat stock exchange, which closed 0.27 per cent higher.
The Dubai Financial Market was the hardest-hit bourse in the region, falling by as much as 5 per cent before recovering in the final hour of trading to close 3.05 per cent lower at 4,468.67, its lowest level since the end of March. The index shed 4.7 per cent on Sunday.
Beleaguered Arabtec once again led losses on the exchange, with its second consecutive 10 per cent price fall. The company's shares ended yesterday at Dh4.05 each, and are down 44 per cent for the past month.
The Abu Dhabi Securities Exchange General Index fared better. It ended the day down 1.0 per cent at 4,783.38, led by Gulf Cement, Abu Dhabi National Company for Building Materials and Dana Gas.
Selloffs on the UAE stock markets were led by retail investors, followed by institutional investors looking to take advantage of falling prices to buy back shares at cheaper levels, according to Khaldoun Jaradat, a trading manager at Abu Dhabi-based Brokerage House Securities.
“It’s nothing to do with any bad news or economic concerns,” he said. “The mood is down, and many people are selling, so even if you don’t want to leave the market you’ll sell to buy back at a lower price at a later time.”
The price of gold rose in early trading yesterday before relenting in the late afternoon.
Gold’s global spot price reached US$1,282.56 per ounce, its highest since May 27, before slipping to $1,275.68, down 0.3 per cent from Friday’s close.
The spot price of silver hit a one-month high of $19.85 before dropping back to $19.62, down 0.4 per cent on the day.
Oil prices fell, giving back their recent gains, after it emerged that the largely autonomous Kurdish region of Iraq was ramping up oil exports.
A tanker is scheduled to depart from Turkey’s Mediterranean port of Ceyhan on June 22 carrying 1 million barrels of crude oil pumped through the Kurdish region’s new pipeline, the Turkish energy minister, Taner Yildiz, said yesterday, according to Reuters.
The pipeline, which bypasses Baghdad, came online last month.
The spot price of Brent crude fell by 1 per cent in early trading yesterday to $112.37 per barrel, from its Friday close of $113.41. In late afternoon, the price stood at $112.57, a fall of 0.7 per cent on the day.
A research note from IHS Energy said that oil prices were likely to remain high during the Iraq crisis.
“Even if there are no disruptions of supplies, just the risk of such outages will add to the geopolitical ‘premium’ on prices,” said IHS, noting that the country’s oil infrastructure will be a tempting target if the offensive by the Islamic State in Iraq and the Levant (ISIL) moves into a higher gear.
The conflict in Iraq has business repercussions not only in the markets but also on the ground.
Abu Dhabi’s Rotana Hotel Management, with properties in the Iraqi cities of Erbil – the Kurdish capital – and Karbala – south of Baghdad and away from the ISIL line– is emphasising that those properties remain safe.
The company has "strong security protocols in place to ensure the safety of our nearly 500 colleagues in both hotels combined", said Omer Kaddouri, Rotana's president and chief executive. "We will be monitoring the situation closely, and hope that soon things will get better."
Rotana expects to complete a Baghdad property late next year.
Another Abu Dhabi hotel operator, Cristal Hospitality, is expecting to pick up business from people who have flooded into Erbil after fleeing the fighting elsewhere, said Kamal Fakhoury, the company’s chief operating officer.
“It is mostly residents of the neighbouring areas that are moving in,” he said.
Cristal’s 95-room Erbil property is expected to open next month.
Crystal has a 307-room property in Baghdad and it is also proving a haven for refugees from the conflict zone.
Mr Fakhoury said people in general were fleeing the Iraqi capital but that “we are getting requests from groups for long-term stays in Baghdad”.
While Cristal’s Baghdad property has 300 staff members, with a majority of them locals, the Erbil property has a pre-opening team of 10, most of them expatriates.
“We have not flown out anyone but we are watching the situation,” Mr Fakhoury said. “We have high security standards at both the properties.”
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