x Abu Dhabi, UAEMonday 22 January 2018

Gulf stocks raise their heads after October's rout

Stock markets in the Gulf edged higher at the week's opener amid volatile trading.

Stock markets in the Gulf edged higher at the week's opener today amid volatile trading as they start a new month following a rout in October linked to the global financial crisis. After shedding around US$250 billion (Dh918bn) from their market value last month, the Gulf markets were trading mostly higher with the exception of the Saudi bourse which opened lower. Analysts have blamed low investor confidence for the rout in October and for the continued volatility in trading.

"I believe trading will remain volatile for some time in the Gulf markets ... because the problem is psychological," said Jassem al Saadun, head of Kuwait's Al Shall Economic Consultants. "We see that whenever indexes rise slightly, investors begin selling because they are afraid of the drop," Mr Saadun said. In the UAE, the Dubai Financial Market, which was the biggest loser in the Gulf last month, was trading up just one percent sinking below the 3,000-point mark, retreating from a 2.6 percent rise at start. Market leader, property giant Emaar, was up 0.9 per cent after trading 4.3 per cent stronger in the morning. The Abu Dhabi Securities Exchange was up 1.54 per cent as the leading property sector rose 4.3 percent and banks added 2.7 per cent. The Saudi Tadawul All-Shares Index (TASI) opened down 1.4 per cent after it rose six per cent on the week's opener yesterday. The Saudi bourse is open Saturday through Wednesday, while others start on Sunday.

The decline came as the leading petrochemicals and banking sectors dropped 2.4 per cent and 1.2 per cent, respectively. The Doha Securities Market surged 5.36 per cent to trade above the key 7,000-point mark, with all sectors rising.

The Kuwait Stock Exchange, the second largest Arab bourse, also erased most of its initial gains and at halfway was trading up 0.57 percent from 1.44 per cent higher at the opening.

The leading banks sector, which rose almost one per cent at the start, was trading down 1.64 per cent as investors awaited action over the Gulf Bank which encountered losses from derivatives deals. Shares of the Gulf Bank, the second biggest lender, remained suspended for the second week. Newspapers reported today that the central bank is preparing to lend the bank 400 million dinars (Dh5.5bn) to help it face losses estimated at more than 200 million dinars.

They also reported that the recently-reformed board of directors was expected to resign on instructions from the central bank. The small Muscat Securities Market gained 6.3 percent and the Bahrain Stock Exchange increased 0.8 per cent. The seven stock markets in the Arab states of the Gulf region saw their indexes sink by an average 25 per cent in October amid the global market meltdown. A mild upturn at the end of the month did little to counteract the earlier rout and the Gulf markets ended October valued at $720bn, an enormous $400bn less than at the start of the year.