All eyes on Fed's next move

World markets rally ahead of a key speech by Federal Reserve chairman Ben Bernanke which could signal further stimulus measures, but Gulf investors remain on the sidelines for now.
Emaar properties was among the biggest movers on the market yesterday. Jeff Topping / The National
Emaar properties was among the biggest movers on the market yesterday. Jeff Topping / The National

Investors worldwide will be glued to their terminals today as Ben Bernanke, the chairman of the US Federal Reserve, delivers an address at Jackson Hole in Wyoming - but investors in the Gulf are holding fire.

Last year's annual meeting was used to signal a second round of quantitative easing, known as QE2, and expectations are high that the flagging strength of the US recovery will augur a QE3.

World equity markets have rallied on optimism that a third round of stimulus measures is on the cards, with the MSCI World Index of global stocks rising 3.29 per cent to 1,168.58 points this week.

However, expectations are such that the absence of a "constructive" solution from the Fed could bring another sell-off on world markets, said Rami Sidani, the head of Middle East and North Africa region portfolio management at Schroders, the international investment house. "If it doesn't happen, the market will be extremely disappointed and you'll see some selling," he said.

Theoretically, the additional liquidity should provide a boost to stock market investors.

But the impact on the UAE's markets has been limited since the markets will be closed from Tuesday to mark Eid Al Fitr.

"Given that most investors are going to be on holiday, regional and domestic liquidity is preferring to stay on the fence," Mr Sidani said.

There has been some slight movement on UAE markets, but they remain hobbled by low trading volumes as Ramadan draws to an end.

The Dubai Financial Market General Index rose 0.5 per cent to 1,465.01, while the Abu Dhabi Securities General Index rose 0.3 per cent to 2,590.49.

Tamweel, Emaar Properties and First Gulf Bank were among the biggest movers on the UAE markets.

Elsewhere in the Gulf, Bahrain's bourse fell but all other markets made tentative gains.

ghunter@thenational.ae

Published: August 26, 2011 04:00 AM

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