Margin calls in UAE could trigger some selling, but 'window dressing' in Kuwait may lift the bourse in late trading
On the last trading session of the year for regional markets, margin calls in UAE could trigger some selling, but 'window dressing' in Kuwait may lift the bourse in late trading.
Dubai's measure has outperformed all regional peers in 2013 and is among the world's top performing equity markets with gains of 105.4 percent.
A recent buying spree, especially in small-caps in Dubai and Abu Dhabi has been on margin, or leveraged trading by retail investors, traders say. Brokerage firms asking for individuals to reduce leverage to zero, or margin calls, for the year-end could result in many closing positions.
Profit-taking would usually be a good incentive for investors to sell after a strong positive year, but a bullish outlook for 2014 and the dividend season just a few weeks away, is keeping many bets on the table, which could minimize selling pressure.
In Kuwait, the benchmark slipped 0.6 percent on Monday to hit its lowest close since Sept. 10. The market has been on a downtrend since early November as investors, disappointed at the government's pace of implementing development projects, cut positions.
It could however, pick up on Tuesday due to a phenomenon specific to Kuwait of 'window-dressing', where investors buy shares in late-minute trading to boost the performance of their portfolio for the year.
Most regional markets will be closed on Wednesday for the New Year, but trading will continue as normal on Saudi Arabia's bourse.