Pressure on equities in the Gulf is likely to remain as crisis deepens
The region’s stock markets are likely to come under selling pressure this week following weakness in international oil prices amid a deepening Eurozone debt crisis, factors that have spooked global investors and driven them to dump stocks and seek refuge in the relative safety of US Treasuries, German Bunds and gold, say analysts.
The region’s bellwether Saudi Arabian market, the only market in the Middle East to remain open for trading on Saturdays, fell yesterday. The Tadawul All Share Index weakened 0.5 percent to 6,057.98, its lowest level since October 22 in Riyadh.
In the UAE on Thursday the market movements were mixed. While the Dubai Financial Market (DFM) index closed 0.11 percent higher at 1,348.59, the Abu Dhabi Securities Exchange general index ended 0.49 percent lower at 2,418.13.
“It is crucial that the new technocratic governments in Italy and Greece achieve something remarkable to encourage the Germans to allow the ECB to print money. Italian and Spanish ten-year bond yields need to be kept below seven percent in order to give them a realistic chance of turning their economies around,” said Gary Dugan, chief investment officer — Private Banking, at Emirates NBD, in his latest weekly research note.
“Investors with cash will have some remarkable opportunities over the course of the next few years to make some significant income and capital gains. However it is important to be patient. We continue to recommend investing in a combination of high quality bonds, sukuks, cash and gold and only very selectively in equities,” Dugan added.
Pradeep Unni, senior relationship manager at Dubai-based commodities trading firm Richcomm Global Services DMCC, in his latest global market update, said the world’s policymakers have fundamentally opposing views of how to manage their currencies and economies.
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