Stock markets across the Gulf region declined at the opening of trade today, following two days of strong gains spurred by government moves to shore up the financial system.
The Dubai Financial Market, which surged more than 22 per cent over the past two days, was down by five per cent at 3,518.00 points.
The market leader, real estate developer Emaar, sank 6.3 per cent, after surging 15 per cent - the maximum authorised by regulators - on each of the previous two days.
The other UAE stock market, the Abu Dhabi Securities Exchange, which also gained 15 per cent over the past two days, shed 1.7 per cent to 3,540.54 points. The key real estate sector slumped 2.7 per cent.
The Kuwait Stock Exchange, the second largest in the Arab world, opened down about two per cent at 11,564.30 points.
The KSE had bucked the trend in other Gulf markets and dropped in the past two days in reaction to modest nine-month profits by a number of major banks. The market leader Zain telecom was down about 8.3 per cent at one stage.
The Muscat Securities market, which gained 14 per cent in the past two days, dropped 1.2 per cent. Bahrain Stock Exchange was down just 0.02 per cent.
The Saudi stock market, the main Arab bourse, dived around eight per cent at its opening later in the morning. The Tadawul All-Shares Index (TASI), which had rebounded 17.5 per cent in the past two days, later clawed back some of its losses and was down only 6.5 per cent at around 6,400 points. All 15 sectors dropped, with the leading petrochemicals and banks sectors shedding almost seven per cent. Over the past two days, the Saudi market recovered more than US$55 billion of capitalisation. Governments in the region have taken a number of actions to support their financial systems after stock markets sustained huge losses last week.
On Tuesday, the UAE announced it will pour another Dh70bn into the country's banks in an action aimed at helping support the economy.
On Sunday, it guaranteed deposits and savings at banks operating in the country, as well as interbank lending.
Saudi Arabia, Kuwait and Bahrain have slashed interest rates, pledged tens of billions of dollars of liquidity to domestic banks and eased lending restrictions.
Qatar also decided to buy between 10 per cent and 20 per cent of bank shares.
*AFP
The specs
Engine: 3.0-litre twin-turbo flat-six
Power: 480hp at 6,500rpm
Torque: 570Nm from 2,300-5,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 10.4L/100km
Price: from Dh547,600
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Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
THE SPECS
Engine: 6.0-litre, twin-turbocharged W12
Transmission: eight-speed automatic
Power: 626bhp
Torque: 900Nm
Price: Dh1,050,000
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Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
UAE currency: the story behind the money in your pockets
