Gulf shares tumble over EM exposure cut
Dubai, March 12, 2014
Dubai's shares slid on Wednesday, leading a Middle East retreat as a gloomy global backdrop worsened a local lull and sparked profit-taking.
Copper, a proxy for China's economic wealth, plunged to a four-year low, worsening fears about slowing Chinese economy and triggered selling across global equities.
"Global selling is affecting sentiment to a certain extent but the correction is a result of a strong early-year performance and a lack of catalysts," Marwan Shurrab, fund manager and head of trading at Vision Investments said of UAE markets.
With fourth-quarter earnings mostly out of the way, investors have little to trade on. A string of companies going ex-dividend has hurt regional markets in the last few days; Dubai Financial Market, the only listed Gulf bourse, dropped 6.7 per cent as it went past the date when shareholders are eligible to receive dividends.
Dubai's index nosedived 3.8 per cent in its biggest one-day drop in more than six months to cut its 2014 gains to 16.8 per cent.
The measure fell to 3,936 points, breaking key technical support at the late February low of 4,026 points; this triggered a double top formed by the February peaks - a classic sign of the end of an uptrend - which points down to 3,810 points.
Abu Dhabi's measure lost 2.8 per cent, breaching for the first time in 17 weeks the low of a prior week, likely pointing to further downside.
"Each UAE market is likely to see increased supply on bounces as investors look to lock in profits or diminish losses as the near-term sentiment turns bearish - thereby suppressing the extent of short-term rallies," said Bruce Powers, technical analyst and president at WideVision.
Qatar's measure fell 1.4 per cent in its third consecutive loss.
Sentiment has been weak in Qatar partly because of its diplomatic dispute with some other Gulf countries. Qatar has dismissed calls by its Gulf neighbours to change its foreign policy, which has involved backing Egypt's Muslim Brotherhood. Last week Saudi Arabia, the United Arab Emirates and Bahrain recalled their ambassadors from Qatar over the issue.
Egypt's bourse gave in to the weak sentiment and the benchmark index slipped 0.2 per cent despite upbeat earnings.
Shares in Telecom Egypt, the landline monopoly, bucked the trend and gained 0.7 per cent to hit a two-year high.
The firm posted consolidated net profits of 2.96 billion Egyptian pounds ($425.27 million) in 2013, compared to 2.62 billion pounds in 2012, according to a financial report published in a newspaper on Wednesday.
The company's chief executive said he expected the newly formed government to grant it a licence to provide mobile services this month or the next.-Reuters