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Markets tumble on Egypt fear
DUBAI — Gulf stock markets tumbled on Sunday as regional investors dumped shares, especially of companies with significant exposure to Egypt.
The Dubai Financial Market shed 4.32 per cent of its value at the opening of trading week, with the benchmark index dropped to 1,543.02 points, its biggest drop since May 25 and lowest finish since September 5. However, the volumes rose to 269.64 million shares from 81.70 million on Thursday.
Emaar Properties, has various projects in Egypt, led the decline on DFM General Index as its shares plunged by 8.26 per cent to Dh3.11. Drake & Scull also fell over eight per cent.
Construction firm Arabtec Holding and Sharjah-based low-cost airline Air Arabia were also among the major losers as their shares dropped by 6.74 per cent and 6.09 per cent, respectively.
Out of 26 stocks traded on DFM yesterday, only five posted gains while 21 declined as investors finally began dumping stocks, especially of companies with significant exposure to Egypt. Nine Dubai stocks declined more than five per cent due to negative mood prevailed in the market.
DP World, the global port operator, declined 6.2 per cent to close at 62 cents on the Nasdaq Dubai exchange. The Dubai World subsidiary is heavily dependent on shipping in the Middle East and Africa, including at the Egyptian Red Sea port of Sokhna, which it manages near the southern entrance to the Suez Canal. “It was natural that investors in the region were affected by a negative sentiment in Egypt, but good thing is that equities recovered in the final session with higher volumes,” Mohammed Ali Yasin, Chief Investment Officer of CAPM Investments in Abu Dhabi, told Khaleej Times.
He said the markets will soon return to normal business and the bearish spell is unlikely to continue in the longer run.
Emaar said in a statement that it was monitoring the situation closely. “Emaar is in 18 countries and Egypt is one of the important markets for the company,” Emaar said.
The Abu Dhabi Stock exchange’s General Index also declined 3.68 per cent to 2,561.06 points, its largest fall since November 30, 2009. Only one company posted gains, 24 stocks declined, while volumes improved to 109.72 million shares from 76.372 million on Thursday.
Etisalat, which operates in Egypt through Etisalat Misr, fell 3.35 per cent in early trading but recovered to Dh10.15, down 0.30 per cent in the final session. Dana Gas shares also plunged to 0.64 fils.
Dana Gas also said its business in Egypt has not been affected by recent turmoil. “Dana Gas Egypt is continuing with routine operations, and the production has not been affected by the current events in Egypt,” Dana Gas Chief Executive Officer Ahmad Al Arbeed said in an emailed statement to Khaleej Times.
“We believe that once there is some political resolution in Egypt, markets in the GCC should bounce back from their lows. Investors should focus on earnings quality and utilise the current downtrend in the markets to improve portfolio quality,” Ahmed Saied Kashoob, Deputy General Manager, Financial Services Company, Muscat, said.
In addition to UAE markets, other Gulf bourses were also down. Qatar’s benchmark index slumped three per cent to 8,709.77 points. Kuwait Stock Exchange dropped 1.8 per cent to close at 6,822 points. Oman’s market declined 3.02 per cent to 6,731.77 points and Bahrain’s main index fell 1.43 per cent to 1,451.49 points. Saudi Arabia was the only major market in the region to post gains. The Tadawul All Shares Index rose 2.47 per cent to 6,421.97 points following a massive 6.4 per cent decline on Satrurday.
Egypt’s stock exchange will remain closed on Monday after having also been shut on Sunday. The main index fell 16 per cent in two days after countrywide protests broke out on Tuesday.
Anil Kumar, Senior Vice-President and Head of Research, The Financial Corporation Company, Muscat said: “The sell-off in the GCC markets is likely to be only a short knee-jerk reaction to growing Middle East political tensions but is unlikely to cause damage to the current uptrend in the Muscat Securities Market and other regional markets such as Qatar and Saudi Arabia.”
“While the situation in Egypt is a concern for the investors across the region, the markets have over reacted. The sentiments among the investors are weak and more so in the case of foreign investors,” Sankar Kailasam, Senior Vice President – Asset Management, Gulf Baader Capital Markets in Muscat.
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