Dubai Financial Market and regional bourses spooked as oil price tumble continues

The DFM fell 6.5 per cent this morning, with Emaar Properties leading the losses, while oil continues to fall.

Markets across the Arabian Gulf fell on Tuesday as the tumbling price of oil spooked investors.

Bourses in Qatar, Oman, Kuwait, Saudi Arabia and the UAE fell as the price of Brent crude hit a five-year low.

“This is a continuation of the panic that was caused due to the continuous oil price drop,” said Tariq Qaqish, the deputy head of asset management at Al Mal Capital.

“I think the selling is overdone – it’s an overreaction,” he said. “The UAE is one of the more diversified economies in the region. The drop in oil prices will not have a huge impact on the budget, and the UAE has strong reserves.”

Brent crude futures hovered just above $66, after touching $65 dollars in intraday trading on Tuesday. This follows an Opec meeting at which member countries, including Arabian Gulf states, decided not to cut oil production in a bid to defend market share.

“Weaker oil has put a dark cloud on the GCC markets,” said Ahmed Shehada, the head of advisory at NBAD Securities, told Bloomberg News. “Foreign outflows have further stimulated the drop,” he said.

The Dubai Financial Market closed down 3.52 per cent, while the Abu Dhabi Securities Exchange fell 2.35 per cent.

The Qatar QE Index lost 2.3 per cent, while the Muscat Securities Market fell 3.26 per cent, and the Kuwait Stock Exchange lost 1.95 per cent.

Saudi Arabia’s Tadawul All Share Index fell 2.45 per cent, with the index’s hydrocarbon stocks falling 3.64 per cent. The MSCI Emerging Markets Index fell 0.9 per cent.

On the DFM, bellwether stock Emaar Properties fell 3.61 per cent. The company has lost approximately 20 per cent of its value since November 25.

“Investors took the opportunity to book some profit in Emaar,” Mr Qaqish said.

Arabtec fell to Dh3.28 in intraday trading, before rebounding to close at Dh3.40 – a 6.6 per cent fall against its Monday close. Shuaa Capital lost 6.4 per cent, Gulf General Investment lost 5.9 per cent, and Dubai Islamic bank lost 5.4 per cent of its value.

Poor market performance was exacerbated by margin calls for retail investors buying on leveraged brokerage accounts, Mr Qaqish added.

“Lots of investors took positions in less well-performing stocks, supported by leverage from banks,” said Mr Qaqish. “When the stock market goes down, the margin calls caused further selling pressures.”

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