Fears of escalating tensions in Iraq sparked a selloff across the region yesterday.
Regional losses were led by the Dubai Financial Market, which fell by 4.71 per cent, its second-largest drop of the year. The Abu Dhabi Securities Exchange lost 2 per cent. Every measure across the Middle East retreated, driven by investor uncertainty over the Iraqi crisis.
“We were expecting a continuity of the positive momentum that we’d seen on Thursday,” said Mohammed Ali Yasin, managing director at NBAD Securities. “The only big news from the weekend was the escalation of the political crisis in Iraq. Initially it was some GCC investors selling and then it spread across the board.”
Blue chip stocks including Emirates NBD and Emaar Properties lost more than 5 per cent. National General Insurance, Aramex and Drake and Skull were the only stocks to register gains.
Asmak, Abu Dhabi National Insurance and Eshraq Properties were the main losers in Abu Dhabi, each falling more than 8 per cent.
Shares in Dana Gas, one of the largest oil and gas investors in the Kurdish region of Iraq, fell by 4.8 per cent despite assurances that its operations in the region had not been affected by fighting in the country.
“Dana Gas operations in the Kurdistan Region of Iraq continue uninterrupted in light of recent events in Iraq. All our facilities and people are safe and there have been no incidents affecting our operations,” Dana said in a statement to Reuters yesterday.
Brent crude rose to a nine-month high of US$114.65 per barrel on Friday, before closing at $113.41 amid concerns of disruption of oil exports from Iraq, Opec's second-largest producer.
Events in Iraq come on top of ongoing volatility in the UAE stock markets, especially the DFM, as investors continue to book gains from the year so far, according to Amer Khan, a portfolio manager at Shuaa Capital.
“The next key milestones for the market are the second-quarter earnings season and larger IPOs like Emaar’s malls business, both of which are several few weeks away,” he said. “So at this time period it’s natural to see some volatility given the year-to-date rises that we’ve seen, with a number of investors looking to book gains.”
Profit-booking was particularly active in the construction and real estate sectors, after the Central Bank warned last week that a Dubai property bubble may be forming, he said.
While there could be a market rebound on potential positive developments this week, there was a danger that ongoing developments in Iraq may drag down investor confidence further, said Mr Yasin.
“I really hope that it doesn’t last very long, because I’m not sure how the market will handle it,” he said. “Today’s drop was a big drop for one day, especially coming after a tough week last week, and it may create uncertainty in investors’ minds, especially smaller investors. These are events that are outside of our control, it’s nothing to do with the market fundamentals.”
jeverington@thenational.ae
* with agencies
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