By: Mahmoud Gamal
Dubai – Mubasher: Eight factors seem to be the key drivers behind weak investor appetite in UAE stock markets at present, led by global market volatility and concerns of the negative forecasts for property markets, analysts told Mubasher.
The increased losses in global markets over the past two weeks added to fears of a trade war between global powers, particularly the US and China, appears to be negatively affecting regional and local markets, Fadi El Ghattis, CEO of Mindcraft Consultants, told Mubasher.
The negative outlook for the real estate sector as companies and economists forecast an increase in supply compared to demand has impacted the sector’s stocks, the analyst continued.
Dividends were less than expected, particularly in the real estate sector, as several companies underwent a restructuring after failing to achieve the required results, El Ghattis noted.
The Dubai Financial Market (DFM) may see further declines in the coming sessions and may even fall below the 3,000-point mark and reach 2,750 to 2,600 points, the analyst told Mubasher.
Meanwhile, NamaaZone CEO Iyad Al Aref commented that in addition to the above reasons, which resulted in weak investor confidence, several markets had taken decisions that prompted speculative trading and performance not an investment-focused stance.
Such decisions involve listing companies that do not generate profits, which resulted in the flow of “hot money” to a limited number of shares, subsequently resulting in a decline in real foreign and institutional investments, Aref highlighted.
He further noted that speculators had exploited investors’ lack of confidence to pressure stock prices, which in turn have dropped to levels not seen since the 2008 and financial crisis.
Indeed, many investors have already considered and resorted to alternative investment options, Aref told Mubasher, indicating that all of the above factors have resulted in a decline in traded volumes and limited investments in local markets.
He concluded that the current state of the markets is not indicative of the bright side of the UAE’s strong economy.
Translated by: Nada Adel Sobhi
