Dubai slips after margin rules change
Dubai, January 5, 2014
Momentum driving markets in the UAE was tempered on Sunday after the regulator approved changes to margin lending rules and said it would crackdown on unlicensed lending, while most other regional bourses scaled higher.
Dubai's index slipped 0.2 percent, easing off Thursday's five-year high.
The market gave back early-session gains as brokers told clients to sell shares so margin limits would fall within the amended regulations.
Although changes to the lending rules aim to improve trading volumes going forward, the likelihood of penalties for not complying with the set limits sent some brokers scrambling to lower margin levels.
Most of the trading on Dubai's bourse was on margin, which is now being cut back, traders said.
"Today, margin trading business from what we can see in volumes is low," said Mohammed Ali Yasin, managing director of Abu Dhabi Financial Services. "This is for the short-term as brokers will raise their capital to allow for more leverage."
Abu Dhabi's index rose 0.6 percent, in its fifth consecutive gain, to a new five-year high.
Banks supported, with Abu Dhabi Commercial Bank up 3.5 percent and Union National Bank 3.9 percent higher. Analysts expect Abu Dhabi lenders to announce strong dividends in the coming weeks.
In Qatar, the measure advanced 1.1 percent in its second sharp advance as investors position for dividends. Regional investors favour Qatari stocks in dividend season, which are among the highest-paying in the region.
In Egypt, Cairo's benchmark index added 0.6 percent to 6,854 points, heading back to the previous peak of 6,876 points - the intraday high of Dec. 26.
The market gained despite fresh violence over the weekend.
Thirteen people were shot dead as supporters of the Muslim Brotherhood clashed with police across Egypt on Friday, defying an ever-widening state crackdown on the movement that ruled the country until six months ago.
"We expect to see more and more violence from the supporters but the market has been quite resilient as people look forward to the constitutional voting in mid-January," said Mohamed Radwan, director of international sales at Pharos Securities. "The question is not if to buy but whether to buy before or after the referendum."
The priority for investors is to see the country move along a set roadmap to restore full civilian rule.
Elsewhere, Saudi Arabia's measure struggled to make gains but closed up 0.2 percent. Oman ticked up 0.1 percent, while Kuwait's benchmark was little changed.
DUBAI: The index slipped 0.2 percent to 3,467 points.
ABU DHABI: The index gained 0.6 percent to 4,384 points.
QATAR: The index rose 1.1 percent to 10,664 points.
EGYPT: The index climbed 0.6 percent to 6,854 points.
SAUDI ARABIA: The index gained 0.2 percent to 8,638 points.
OMAN: The index gained 0.1 percent to 6,899 points.
KUWAIT: The index was flat at 7,551 points.
BAHRAIN: The index was flat at 1,248 points. - Reuters