UAE shares decline on Trump election victory

Investors concerned that the next US president may move to make good on pledges to protect American industry by undoing global trade ties.

Stocks in the UAE fell, following benchmark equities around the world, as Republican Donald Trump was elected as the US president, triggering concerns that he may move to make good on pledges to protect American industry by undoing global trade ties.

Mr Trump’s victory came as a surprise as most polls had favoured the Democrat candidate Hillary Clinton.

The Dubai Financial Market Index closed 0.8 per cent lower after falling as much as 2.1 per cent earlier in the day as 19 stocks fell, six rose and 11 remained unchanged.

In Abu Dhabi, the key equities gauge fell 0.6 per cent as 12 stocks fell, seven rose and 43 were unchanged. The index earlier fell as much as 1.9 per cent.

“Emerging market stocks have enjoyed a strong rally in 2016, especially highly correlating markets such as the UAE, which have seen significant passive flows as well as high allocations from actively managed emerging market funds,” said Simon Kitchen, a strategist at the Egyptian investment bank EFG-Hermes.

“Trump’s victory implies rising barriers to global trade that will impede growth in emerging markets.”

The MSCI Emerging Market index, a key barometer of listed companies across the developing world, fell 2 per cent last afternoon UAE time. Emerging market currencies also saw steep losses, especially in Mexico, which relies heavily on trade with the US. The peso fell as much as 11.8 per cent before regaining some ground against the dollar.

Elsewhere, S&P 500 futures dropped 2 per cent, paring earlier losses that took the futures down to the maximum 5 per cent limit. Europe’s benchmark index, the Euro Stoxx 50, fell 1.7 per cent, while the Nikkei 225 benchmark of Japanese equities tumbled 5.4 per cent.