Dubai Financial Market chases Saudi stocks into deeper losses

Dubai investors go into full retreat after the Saudi bourse fell as much as 5.2 per cent on opening.

A Saudi trader monitors stocks at the Saudi Investment Bank in Riyadh. The Tadawul suffered a 2.6 per cent loss on Thursday. Fahad Shadeed / Reuters

Saudi Arabia’s stocks tumbled hard out of the gate on Thursday, sending already skittish Dubai investors into full retreat. Both bourses closed the day with big losses.

Dubai’s benchmark slid mildly during the first half of the trading session but took a more precipitous decline after midday, when Saudi Arabia’s bourse opened significantly lower.

“It’s panic-selling. Sometimes markets get hurt badly and today is one of those days, so it’s a domino effect,” said Fathi Ben Grira, the chief executive at Mena Corp, an Abu Dhabi-based brokerage. “But at the same time, the cash is staying in their account, rather than selling the shares and demanding the cheque. They’re waiting for the markets to rebound, that’s an important difference.”

The Dubai Financial Market General Index closed down nearly 5 per cent at 4,270.43 points. The Saudi Tadawul All-Share Index recovered slightly for a 2.6 per cent loss.

In Dubai, Emaar Properties, the developer behind the world’s tallest skyscraper, dropped 2.9 per cent to Dh9.90 a share. Arabtec, the emirate’s biggest contracting firm, fell 8.6 per cent to Dh3.58.

Dubai Islamic Bank declined 7.1 per cent to Dh6.80.

The losses from Saudi Arabia and Dubai followed Asian markets, which dipped lower earlier during the day, taking cues from US equities the night before amid weak retail sales figures.

US retail sales fell last month for the first time since January, prompting worries over a potential signals of cautious spending into the holiday season. They were down 0.3 per cent for the month of September, according to the US commerce department.

The results triggered a fifth consecutive day of losses for the Dow Jones Industrial Average Index, which declined 1 per cent on Wednesday to 16, 141.74 points.

The S&P 500 Index slipped 0.8 per cent on Wednesday to close at 1,862.49 points.

Japan’s Nikkei 225 Index yesterday fell 2.2 per cent to 14, 738.38 points. Hong Kong’s Hang Seng index edged 0.5 per cent lower to close at 23,013.65 points.

The US retail sales data is the latest in a slew of weak economic figures that had investors concerned this week, prompting worries over potential slower global economic growth.

Oil prices have also been on the decline since last Friday.

Brent crude on Thursday fell below $83 a barrel taking it to a four-year low. The declines came on the back of lower growth forecasts from the IMF this month. On October 7, the fund slashed its global growth forecast to 3.8 per cent, down from its July prediction of 4 per cent.

“Global markets need a correction, definitely. The rally has been so strong and we did not see any significant break in the last few years,” said Tariq Qaqish, the head of asset management at Al Mal Capital, a Dubai-based investment bank.

“In terms of our story, we can – to a certain extent – be more resilient due to the financial reserves the UAE, Saudi, Kuwait and Qatar have. But again, we will be highly correlated on what’s happening globally in terms of the stock market and oil prices.”

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