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Markets Head Towards Key Support Level

DUBAI - UAE markets reacted strongly to the global rout in equity markets on Monday. Investors were particularly unnerved by news that Japan’s Nikkei index closed at a 26-year low despite measures taken by policymakers to prop up the market.

In Dubai the benchmark Dubai Financial Market (DFM) closed down 5.80 per cent at 2922.66 points to close at its lowest level since March 2005.

Once again the real estate sector was hardest hit as investors continued to fret over the health of the market following an earlier press report that speculators were disposing of off-plan purchases at no premium.

The real estate sub index was down 8.10 per cent. Emaar Properties fell 9.25 per cent. Mortgage provider Tamweel shed 9.58 per cent with shares in Dubai Islamic Bank off 8.99 per cent.

The DFM has fallen over 38 per cent since the beginning of September.

Analysts said the DFM was heading towards a key technical support level at 2700 a point it last reached in February 2005.

According to Faisal Hasan Head of Research at Global Investment House, “It’s the fear factor which has taken precedent over fundamentals with the perception of the likely depth and geographic spread of the current situation on the rise. Fundamentals of the GCC region have not been undermined much with the GCC region being one of the most insulated globally with little banking exposure in the West”.

On the Dubai International Financial Exchange, DP World lost 8.57 per cent to close at $0.32. The stock has fallen 75 per cent since its IPO.

The Abu Dhabi Securities Exchange (ADX) lost 2.01 per cent to close at 3321 points down almost 29 per cent since the beginning of September.

Elsewhere in Kuwait the KWSE closed 2.22 per cent lower at 9,889 points as troubled Gulf Bank sought to assure customers it was operating normally despite withdrawals by customers as investors urged the government to resign. In Saudi Arabia the TASI which is down 50 per cent this year, closed off 4.17 percent at 5,301 points, its lowest level since at least January 2007.

mark_townsend@khaleejtimes.com