Global market turmoil hits UAE

The region’s equity markets, with the exception of the UAE, saw solid gains and strong performance last month. (Getty Images)

Stock markets in the UAE are suffering from the pullout of foreign money which has contributed to market losses of 3.8% in the Emirates, according to data released Saturday by equity firm Rasmala.

“Recent signs of foreign money leaving the [UAE] market as a result of the turmoil in global equity markets further depressed sentiment in the market,” Khaled Al Masri, executive partner at Rasmala, said in a report.

The region’s equity markets, with the exception of the UAE, saw solid gains and strong performance last month, adding to their year-to-date gains, while global equity markets were ‘severely affected’ by the knock-on effects of the sub-prime mortgage crisis in the US, the report stated.

Last month, all GCC-based markets made gains with the exception of the UAE, which declined by 3.8%.

The Dubai Financial Market (DFM) experienced negative investor sentiment after Emaar Properties announced only a marginal growth in net profits - an increase of 1.3% for the second quarter of 2007 to 1.55 billion dirhams ($422 million).

The Abu Dhabi market followed suit by trading in negative territory following a positive start to the month, after market heavyweight Abu Dhabi Commercial Bank failed to post results in line with market expectations. The market ended almost 2% lower for the month with trading volumes about 20% lower than previous months.

However, the Saudi Stock Exchange (Tadawul) is the only bourse in negative territory from a year-to-date perspective - 5% down despite gains in July - remaining the worst performing market in the region for 2007.

Saudi Arabia’s market posted solid gains of over 9% for the month of July with over a 50% increase in trading volumes, according to the report.

Kuwait’s market on the other hand cemented its position as the best continued performing regional equity market with year-to-date returns of close to 25%.

The country marched ahead with 4.2% gains during July as major companies posted substantial growth in their first-half earnings, further reinforcing the market’s positive momentum.

In Qatar, the market continued to reverse its poor performance from the beginning of the year with a 2.5% monthly gain, taking its year-to-date return to close to 7%, the report said.

Inflation in Qatar also started to cool down, down from 15% for first three months of the year to 12.8% for the first-half. 

“First-half corporate results for 2007 were generally well-received by the investor community,” Al Masri said in the report.

“We believe that GCC equities in particular will remain attractive based on price/earnings and dividend yield measures, as compared to their peers in the broad emerging markets universe,” he added.

Strong oil prices, vibrant domestic real estate markets, and the growth of the Islamic sukuk markets are some main factors pointing to a healthy market environment, Al Masri stated.

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