UAE markets fell on Sunday as the second day of Ramadan led to soft retail volumes coupled with disappointment over last week’s Opec decision.
The Dubai Financial Market General Index fell 1 per cent to 3,293.60, dragged lower by companies including Marka. The retail investment company, struggling to turn a profit amid an economic slowdown, announced it had appointed a new chief executive. Its shares dropped by 1.2 per cent to 73.5 fils.
Emaar Malls also fell. Shares in the owner of Dubai’s biggest shopping mall, The Dubai Mall, dropped 2.3 per cent to Dh2.51.
“There is very little encouragement for investors to deploy capital,” said Julian Bruce, EFG Hermes’ head of institutional trading in Dubai.
The other major factor that weighed on regional markets was the aftermath of last week’s Opec meeting. The benchmark index in the UAE’s energy capital, Abu Dhabi, fell by 0.5 per cent to 4,496.38.
Opec and non-Opec countries agreed to extend cuts to oil output at current levels until March 2018, at 1.8 million barrels per day. Nigeria and Libya remain exempt from the deal while Iran, which was allowed to increase production in December, will maintain the same output target.
The price of Brent crude, the international benchmark, fell by 4.6 per cent to US$51.46 per barrel on Thursday after the news, rebounding by 1.3 per cent on Friday to $52.15. “Clearly disappointment with the Opec meeting weighed on oil markets and as usual, there was a knock-on effect across Mena equities – and in this case, a negative one,” said Mr Bruce.
Abu Dhabi National Energy Company, known as Taqa, and Dana Gas were hit as a result. Shares in Taqa dropped by 1.8 per cent to 56 fils, while Sharjah-based Dana Gas fell by 4.9 per cent to 39 fils. Both companies recently reported favourable first-quarter profits – Taqa’s first for two years. Dana Gas continues to struggle with outstanding arrears while trying to reach an agreement with bondholders on its sukuk that matures in October.
Regional markets are expected to remain quiet as a result of overseas holidays. Today is a bank holiday in the United Kingdom as well as Memorial Day in the United States. “There’s going to be very little activity from these countries and these two centres form a large part of the region’s institutional investment,” said Mr Bruce.
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