Uncertainty dominated UAE and Arabian Gulf markets yesterday amid falling Chinese equities and lower oil prices, as the world holds its breath for a decision on US interest rates this week.
Most Asian stocks fell yesterday after the Shanghai Composite Index closed down 2.6 per cent, following the release of disappointing Chinese industrial production data for August.
Japan’s Nikkei and Seoul’s Kospi lost 1.6 per cent and 0.5 per cent respectively, although the Hang Seng ended the day 0.2 per cent higher.
Shares in Abu Dhabi suffered their sharpest one-day fall in nearly two weeks, dragged down by heavyweight stocks Etisalat and FGB.
Etisalat shares suffered their worst decline in three weeks, closing down 3.3 per cent at Dh14.25.
The fall came in the run-up to the opening of the telco’s shares to foreigners for the first time today.
FGB, the heaviest weighted stock on Abu Dhabi’s headline index, fell 1.4 per cent at Dh13.95.
The Abu Dhabi Securities Exchange General Index ended the day down 1.4 per cent at 4,485.99.
Dubai shares closed in the red for their third consecutive day, finishing 1.5 per cent lower at 3,511.28, their lowest level since late August.
Dubai Investments and Emirates NBD were among the worst affected stocks, closing down 3.3 and 3 per cent respectively.
Shares in the telecoms operator du were unchanged at Dh5.17, after its board approved an interim dividend of 23 fils per share, consisting of a cash dividend of 13 fils and a special payout of 10 fils per share. Saudi stocks ended the day down 1.5 per cent, their third consecutive day in the red, while Qatar Exchange ended down 1 per cent.
In addition to being discouraged by the performance of Asian stocks, regional investors are wary of the impact of a possible rise in US interest rates across emerging markets, according to Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi.
The US Federal Reserve Open Market Committee is due to meet tomorrow, with a decision on whether to raise interest rates for the first time since 2008 to be announced on Thursday.
“Right now investors fear the impact of an increase in volatility an interest rate rise would cause across emerging markets as a whole, rather than it having a direct impact on the UAE,” said Mr Henin.
“The main risk that emerging markets face is the possibility of a currency war as countries consider weakening their currencies following a rate rise, with foreign investors with large emerging markets exposures at risk.”
Further hampering investor sentiment is the price of crude oil, which slipped yesterday in the face of weakening international demand. Brent crude futures were down 89 cents per barrel at $47.30 in early evening UAE time. European markets traded nervily yesterday, the continent’s main bourses opening up marginally but slipping into negative territory in the afternoon.
In the United States, the S&P 500 opened slightly lower at 1,963.06.
jeverington@thenational.ae
Follow The National's Business section on Twitter
