Gulf stocks drop as Fed rate-hike bets rise

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Gulf stocks drop as Fed rate-hike bets rise
Previously only Emirati individuals were allowed to own shares in the etisalat, which is 60 per cent owned by the UAE government.

Dubai - DFM remains bearish; ADX up on etisalat announcement

By Issac John

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Published: Mon 7 Sep 2015, 12:00 AM

Last updated: Tue 8 Sep 2015, 9:45 AM

Dubai stocks declined with most Gulf equities after the US jobless rate dropped while Abu Dhabi's ADX General Index gained, spurred by etisalat's five per cent jump on news that it would allow foreigners to trade its stock directly for the first time this month.
The DFM General Index declined 0.8 per cent to close at 3,542.14 points, following six weeks of losses, the longest streak in almost four years, as ADX General Index rose 0.7 per cent at 4,408.98 points.
Dubai's trading volume was less than a third of its 12-month daily average, and traders in Abu Dhabi exchanged 90 million shares, compared with an average 130 million.
"Trading in Etisalat Group's shares on the Abu Dhabi Stock Exchange by non-UAE individuals... will start on Tuesday, September 15, 2015," said a statement from the firm's board posted on the exchange's website.
Etisalat, the second largest Arab telecoms firm after Saudi Telecom, serves 145 million customers in 15 countries.
Previously only Emirati individuals were allowed to own shares in the firm, which is 60 per cent owned by the UAE government.
The telecom major said that under the new rules shares would be open to foreign individuals, foreign corporate entities, UAE free zone entities and UAE incorporated entities.
Total foreign ownership in etisalat will not be allowed to exceed 20 per cent. Etisalat's share price rose by about five per cent on the news, pushing the Abu Dhabi index to open slightly up as the bourse in neighbouring Dubai dropped 1.6 per cent.
The drop in US jobless rate to a level the Federal Reserve considers to be full employment bolstered the case for an interest-rate increase and depressing demand for riskier assets. Saudi equities rose.
On the DFM, Emaar Properties, the real estate developer with the biggest weighting on the gauge, led the descent with a 1.9 per cent drop.
Stocks in Saudi Arabia reversed losses after the kingdom's central bank governor said the nation would stick with its currency peg to the US dollar.
Equities across emerging markets fell last week after US Labour Department data showed unemployment in the world's largest economy fell to 5.1 per cent, the lowest since April 2008.
The MSCI Emerging Markets Index slumped 3.9 per cent in the five days through September 4, its 15th decline in the 19 weeks since April.
Monetary policies in the GCC (Gulf Cooperation Council) countries are additionally influenced by Fed data because most currencies in the region are pegged to the dollar.
Analysts said the regional selloff would continue, until global volatility decreases and oil finds a bottom.
Brent crude fell 2.1 per cent on Friday, capping a second consecutive week of higher-than average price swings. The GCC is home to about 30 per cent of the world's proven oil reserves and relies on income from crude to fund government spending.
Qatar's QE Index lost 0.6 per cent, Kuwait's stock gauge fell 1.6 per cent and Oman's MSM30 Index slipped 0.1 per cent. Egypt's EGX30 declined 0.2 per cent in Cairo.
- issacjohn@khaleejtimes.com


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