Retail selling weighs on Dubai
Dubai, January 6, 2014
Dubai's bourse fell on Monday, declining for a second day since the UAE regulator announced new margin lending rules, while bets on earnings and dividends helped most Gulf markets rise.
Dubai's index, which hit a five-year peak on Thursday, fell 1.1 percent as it extended losses after the Securities and Commodities Authority (SCA) said it would crack down on unlicensed margin lending. That prompted some brokers to ask clients to sell shares to lower margin levels.
"SCA's new rules triggered the sell-off - I think the market is still in good condition and it will absorb this margin panic and will continue its rally," said Mohab Maher, senior sales trader at Mubasher.
The stocks making the biggest declines were those usually targeted by retail investors, who often use margin lending. Emaar Properties fell 1 percent, while Gulf Navigation tumbled 6.9 percent.
Abu Dhabi's bourse rose 1.7 percent and proved resilient to the new margin rules as institutions bought bluechip stocks.
First Gulf Bank and National Bank of Abu Dhabi jumped 4.4 percent and 5.3 percent respectively.
RAK Cement rose 3.8 percent, extending gains since Thursday to 19.1 percent. Analysts said the stock had lagged a recovery in the property-related stocks and was playing catch up. Shares such as Emaar gained more than 100 percent in 2013, while RAK Cement climbed 79 percent last year.
In Qatar, Doha's benchmark rose 1.1 percent to its highest close since August 2008.
Investors typically try to buy more stocks in January ahead of companies' annual dividend payments early in the year. Qatari firms often pay the highest dividends in the region.
"Qatar's move is seasonal because of the dividends but the decent bids we're seeing at this stage is partly an element of rotation," said Amer Khan, head of asset management at Shuaa Asset Management. "If you see money coming out of the UAE, you'd see it naturally parking in Qatar at this time."
Saudi Arabia's index slipped 0.3 percent, halting a six-session rally to ease from Sunday's five-year high. Saudi Basic Industries Corp (SABIC) fell 0.4 percent.
"Petrochemicals have outperformed the Tadawul so far, which goes to show the strong case towards the sector while more locally driven firms will be more challenged because of labour issues," said Khan.
A government crackdown on illegal labourers has affected some sectors, particularly construction. Banks that lent to building firms may also be impacted.
DUBAI: The index fell 1.1 percent to 3,428 points.
ABU DHABI: The index rose 1.7 percent to 4,456 points.
QATAR: The index rose 1.1 percent to 10,784 points.
EGYPT: The index declined 0.8 percent to 6,801 points.
SAUDI ARABIA: The index slipped 0.3 percent to 8,612 points.
OMAN: The index rose 0.5 percent to 6,932 points.
KUWAIT: The index climbed 0.8 percent to 7,608 points.
BAHRAIN: The index edged up 0.1 percent to 1,250 points. - Reuters