x Abu Dhabi, UAEWednesday 24 January 2018

Dubai falls after MSCI delays key index decision for six months

Breaking News: Investors disappointed after index provider says no chance of upgrade to emerging market status until end of year.

Traders at the Dubai Financial Marketai. Pawan Singh / The National
Traders at the Dubai Financial Marketai. Pawan Singh / The National


Dubai’s measure fell to its lowest point in a week after a decision to delay a possible upgrade of the UAE bourses to “emerging” market status for another six months.
The decision by influential index compiler MSCI  comes after months of speculation in the markets.
The late introduction of the key settlement system, where securities are delivered on the same day as payment, was cited as a key reason for the delay.
“Given the new DVP models were introduced only in May 2011, few market participants have had the opportunity to make a full assessment yet,” MSCI said in a statement.
“This additional review period will also give more time to the regulators and the stock exchanges to address the remaining concerns raised by international institutional investors.”
The Dubai Financial Market dropped 0.8 per cent at the opening bell to 1,565.65 points, the lowest point since June 13.
"Look at everything," said one day trader at the Dubai Financial Market, pointing to the stocks on the trading board as markets opened. "Dyed red."
Bourse operator DFM Company, the only publicly listed market in the Arab world, staged its biggest one day loss at the open.  It fell 3.9 per cent to Dh1.24.
Losses on blue-chip stocks including Emaar Properties, Arabtec and Drake & Scull International dragged on the index.
Shares in those companies lost 2.5 per cent to Dh3.13, 2.9 per cent to Dh1.32 and 1.5 per cent to 99.5 fils respectively.
But some market players remained positive about the outcome.
“This is not a “no”, it is a clear recognition that something that has been done but this is a second chance,” said Hassaim Arabi, chief executive at Gulfmena Investments in Dubai.
MSCI cited limits on foreign ownership as another main reason for delaying the upgrade.
Calling Qatar’s market “quasi un-investable”, the index compiler suggested the Doha exchange would not qualify for emerging markets unless it lifted its 25 per cent cap on foreign ownership.
A senior official from the UAE’s Ministry of Economy has also said the country would not ease restrictions on the current 49 per cent cap on foreign ownership.