Falling oil prices continued to pressure stocks for a second consecutive day yesterday amid signs that larger investors have temporarily pulled back, seeking better returns elsewhere.
The Dubai Financial Market General Index closed down 2.6 per cent at 3,519.55, adding to the 2.54 per cent drop on Sunday.
It was the first time the index has closed below 3,600 since January 6. The Abu Dhabi Securities Exchange General Index closed down 1.35 per cent at 4,635.22.
Oil prices continued their downwards trend yesterday as international inventories built up. Brent crude fell by $1.34 to $53.34 a barrel in early trading before recovering to about the $54 mark by midafternoon UAE time.
Concerns over oil prices had been exacerbated by a drying up of liquidity on both stock exchanges in recent weeks, with retail investors left to dictate the direction of the market, according to Khaldoun Jaradat, a trading manager at Brokerage House Securities.
“With most stocks there’s no real fundamental reason to sell, but the market’s going down, which just prompts other retail investors to sell as well, which in turn drives the market even lower,” he said.
A second trader who asked not to be named said that several larger investors had pulled back from UAE markets in recent weeks over concerns about the impact of oil prices.
“Liquidity is very poor right now. A lot of big investors have been shifting their money to other markets such as Egypt, chasing a better return,” he said.
The same trader predicted that stocks would continue to fall today, but they would rise again before the end of the week.
“Clearly there’s a correction going on, and we’re likely to see further 1 to 2 per cent falls on Tuesday. But our expectation is that it will be done by the end of this week, with an uptrend next week. There’s still a number of shares we’re waiting for dividend announcements for.”
Emaar Properties was among the worst-affected stocks in Dubai after it clarified that it was not involved in recently announced plans for a new capital city in Egypt.
The developer’s shares fell 4.76 per cent to Dh6.61.
Drake and Scull International and Damac Properties were among the other decliners, falling 5.5 per cent and 3.83 per cent respectively.
Aldar Properties was the main lagger in Abu Dhabi, ending down 5.15 per cent at Dh2.21.
jeverington@thenational.ae
Follow The National's Business section on Twitter
