Thanks to delayed US action, GCC markets are rebounding
Most Gulf indices ended in positive territory yesterday as retail investors found enough reason to buy shares after US delayed military action against Syria.
Dubai’s benchmark DFM General Index rose 3.02 per cent, the biggest jump in 18 months, to end at 2599.35. The Abu Dhabi index climbed 1.81 per cent to 3802.22.
“I think it was a bit of a relief rally after the UK voted against the resolution and US postponing its decision to go into Syria,” said Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s asset management group.
President Obama said on Saturday that he would seek the authorisation from the US Congress before he opts for a military action, urging lawmakers to debate on what he termed as a 'national security’ issue.
Elsewhere in the Gulf, Saudi Arabia’s Tadawul Index advanced 1.45 per cent; Oman was up 0.660 per cent and Qatar gained 0.50 per cent. Kuwait and Bahrain closed lower, 0.12 per cent and 0.02 per cent respectively.
Last week, Dubai’s gauge had dropped 6.6 per cent as markets in the region were rattled by the possible military intervention against the alleged chemical weapons attack by the Al Assad regime.
“Today’s market move was a partial reversal of the massive knee jerk reaction we saw last week, precipitated no doubt by the delay we saw in the US intervention and led by retail investors,” said Amer Khan, director at Shuaa Asset Management.
The Dubai Financial Market General Index was down 2.5 per cent to 2523.1 points at the end of August compared to 2588.5 points at the end of July, according to DFM. The market capitalisation decreased at the end of this month by 1.8 per cent amounting to Dh232.8 billion compared to Dh237.1 billion at the end of previous month.
Yesterday, in Dubai, Emaar Properties gained 1.74 per cent, the most in almost four weeks, to Dh5.85. Deyaar Development and Union Properties, surged 12.50 per cent and 9.73 per cent respectively and were among the top three gainers. In Abu Dhabi, Aldar Properties soared 6.91 per cent to end at Dh2.63.
Concerns however remain depending on how the situation evolves in the coming days.
“If it is contained, we are okay, but it spreads and becomes more of a regional type of conflict, then that’s a huge worry,” said Khokhar.
“Uncertainty regarding the scale and timing of the US engagement as well as the consequences remain,” said Khan. “Given the uncertainty, volatility may well remain high near term.”