Gulf markets fell after the US credit downgrade with Qatar and the UAE posting the biggest declines. Above, an investor ponders his next move.
Gulf markets fell after the US credit downgrade with Qatar and the UAE posting the biggest declines. Above, an investor ponders his next move.

Region feels the effect of US ratings downgrade



It was the Gulf's turn to take a hit yesterday as markets sank across the region in the aftermath of a historic credit downgrading in the US and amid widespread concern over the outlook of the global economic recovery.

Financial Fallout: More on the global economic chaos

Finance chiefs hold crisis talks Global finance officials used emergency meetings to seek to stem the fallout from the debt crises brewing in both the US and Europe. Read article

UAE likely to stick with dollar peg Regional pegs to the US dollar may come under the spotlight after the downgrade of the US credit rating by Standard & Poor's. read article

US downgrade threat to Gulf borrowing costs Banks in the Gulf may find themselves in a tough position following the downgrade of the US's credit rating by Standard and Poor's, analysts say. read article

Global gloom takes its toll on UAE stock markets Markets slumped in the Emirates amid a broad selloff of company stocks. Read article

Major indexes in the UAE and Qatar suffered the biggest declines in stock values, while those in Bahrain, Kuwait and Oman also fell.

In Abu Dhabi, where investors did not retreat as much, stocks listed on the Abu Dhabi Securities Exchange General Index slid 2.5 per cent and ended the day at 2,603.22.

Shares declined more than 3.6 per cent on the Dubai Financial Market General Index, its largest drop in more than five months. It closed at 1,484.31 and is now down 12 per cent from this year's high in April.

The Bahrain Bourse All Share Index slipped 0.3 per cent, while Kuwait's gauge dropped 1.6 per cent. In Oman, the MSM 30 Index fell 1.9 per cent. In Qatar the QE index fell 2.5 per cent.

The declines in both the local and regional stock markets are "due to uncertainty on [the global] economic outlook", said Marwan Shurrab, the chief trader at Gulfmena Investments, an asset management company based in Dubai. "The potential [for] slowdown in the recovery from the recession is high, which is one of the reasons we're seeing high volatility and sell-offs on markets," he added.

Many investors in the region also remain cautious given the Gulf's strong ties to the US economy.

The dirham, as well as four other currencies in the Gulf, is pegged to the greenback. A high amount of the region's oil wealth is also weighted in US dollars.

"If the US dollar starts to lose ground against major currencies, it'll affect growth in the region - and oil prices as well, which is the main source of revenue here," Mr Shurrab warned.

Both indexes in the Emirates were down further in intraday trading yesterday, pressured largely by the uncertainty in Saudi Arabia's stock market when it first opened.

Investors in Saudi Arabia saw the country's Tadawul All-Share Index shed nearly 5.5 per cent of its value on Saturday, or about US$7.5 billion (Dh27.54bn), following news Standard & Poor's ratings agency had cut the US's coveted "AAA" status for the first time in the country's history.If turmoil does spread to financial markets around the world, it could raise borrowing costs for the US government.

Trading did start to recover on the kingdom's stock market by midday yesterday, and its index ended the day 0.8 per cent higher.

Investors looking ahead to the opening of trading markets in other parts of the world today are now bracing for more volatility, experts say.

One issue compounding matters is that trading has been relatively light this month, as many investors tend to go on vacation. Since it is also the month of Ramadan this year trading is even quieter than usual in the region.

"Trading volumes are at their lightest pretty much everywhere in the world," said Jahangir Aka, the senior executive officer of SEI Middle East, an investment management firm based in Dubai. "Reactions are being made on some pretty thin volumes relative to things that probably would not create such an impact in normal times."

Financial experts say the markets could improve if more positive economic data quickly comes out from the US or Europe, where many countries are weighed down by debt.

Last week, for instance, figures showing a growth in new jobs opening up in the US gave signs of improvement in at least one key area. "From an economics perspective, this is why we're being very cautious here," said Mr Aka. "This isn't the time to panic."

Our family matters legal consultant

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

Company profile

Name: Purpl

Co-founders: Karl Naim, Wissam Ghorra, Jean-Marie Khoueir

Based: Hub71 in Abu Dhabi and Beirut

Started: 2021

Number of employees: 12

Sector: FinTech

Funding: $2 million

UAE tour of the Netherlands

UAE squad: Rohan Mustafa (captain), Shaiman Anwar, Ghulam Shabber, Mohammed Qasim, Rameez Shahzad, Mohammed Usman, Adnan Mufti, Chirag Suri, Ahmed Raza, Imran Haider, Mohammed Naveed, Amjad Javed, Zahoor Khan, Qadeer Ahmed
Fixtures and results:
Monday, UAE won by three wickets
Wednesday, 2nd 50-over match
Thursday, 3rd 50-over match

Company profile

Company: Verity

Date started: May 2021

Founders: Kamal Al-Samarrai, Dina Shoman and Omar Al Sharif

Based: Dubai

Sector: FinTech

Size: four team members

Stage: Intially bootstrapped but recently closed its first pre-seed round of $800,000

Investors: Wamda, VentureSouq, Beyond Capital and regional angel investors

SPEC SHEET: APPLE IPAD (2022)

Display: 10.9-inch Liquid Retina IPS LCD, 2,360 x 1,640, 264ppi, wide colour, True Tone, Apple Pencil 1 support

Chip: Apple A14 Bionic, 6-core CPU, 4-core GPU, 16-core Neural Engine

Storage: 64GB/256GB

Platform: iPadOS 16

Main camera: 12-megapixel wide, f/1.8, 5x digital, Smart HDR 3

Video: 4K @ 24/25/30/60fps, full HD @ 25/30/60fps, slo-mo @ 120/240fps

Front camera: 12MP ultra-wide, f/2.4, 2x, Smart HDR 3, Centre Stage; full HD @ 25/30/60fps

Audio: Stereo speakers

Biometrics: Touch ID

I/O: USB-C, smart connector (for folio/keyboard)

Battery: Up to 10 hours on Wi-Fi; up to 9 hours on cellular

Finish: Blue, pink, silver, yellow

In the box: iPad, USB-C-to-USB-C cable, 20W power adapter

Price: Wi-Fi — Dh1,849 (64GB) / Dh2,449 (256GB); cellular — Dh2,449 (64GB) / Dh3,049 (256GB)

Anxiety and work stress major factors

Anxiety, work stress and social isolation are all factors in the recogised rise in mental health problems.

A study UAE Ministry of Health researchers published in the summer also cited struggles with weight and illnesses as major contributors.

Its authors analysed a dozen separate UAE studies between 2007 and 2017. Prevalence was often higher in university students, women and in people on low incomes.

One showed 28 per cent of female students at a Dubai university reported symptoms linked to depression. Another in Al Ain found 22.2 per cent of students had depressive symptoms - five times the global average.

It said the country has made strides to address mental health problems but said: “Our review highlights the overall prevalence of depressive symptoms and depression, which may long have been overlooked."

Prof Samir Al Adawi, of the department of behavioural medicine at Sultan Qaboos University in Oman, who was not involved in the study but is a recognised expert in the Gulf, said how mental health is discussed varies significantly between cultures and nationalities.

“The problem we have in the Gulf is the cross-cultural differences and how people articulate emotional distress," said Prof Al Adawi. 

“Someone will say that I have physical complaints rather than emotional complaints. This is the major problem with any discussion around depression."

Daniel Bardsley

How the UAE gratuity payment is calculated now

Employees leaving an organisation are entitled to an end-of-service gratuity after completing at least one year of service.

The tenure is calculated on the number of days worked and does not include lengthy leave periods, such as a sabbatical. If you have worked for a company between one and five years, you are paid 21 days of pay based on your final basic salary. After five years, however, you are entitled to 30 days of pay. The total lump sum you receive is based on the duration of your employment.

1. For those who have worked between one and five years, on a basic salary of Dh10,000 (calculation based on 30 days):

a. Dh10,000 ÷ 30 = Dh333.33. Your daily wage is Dh333.33

b. Dh333.33 x 21 = Dh7,000. So 21 days salary equates to Dh7,000 in gratuity entitlement for each year of service. Multiply this figure for every year of service up to five years.

2. For those who have worked more than five years

c. 333.33 x 30 = Dh10,000. So 30 days’ salary is Dh10,000 in gratuity entitlement for each year of service.

Note: The maximum figure cannot exceed two years total salary figure.

COMPANY PROFILE

Name: Xpanceo

Started: 2018

Founders: Roman Axelrod, Valentyn Volkov

Based: Dubai, UAE

Industry: Smart contact lenses, augmented/virtual reality

Funding: $40 million

Investor: Opportunity Venture (Asia)

The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat

The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat


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