Dubai’s bourse tumbles to an eight-week low as retail investors cut risk after the United States moved a step closer to launching military action against Syria.
The index slumped 3.7 per cent to close at 2,397 points, its lowest finish since July 11.
Leaders of the U.S. Senate Foreign Relations Committee have reached an agreement on a draft authorisation for the use of military force in Syria, paving the way for a vote by the committee on Wednesday.
“Everything is in risk-off mode and given the scale of the fall, this is retail investors staying cautious,” says Amer Khan, fund manager at Shuaa Asset Management.
“These are headline-driven fears as local fundamentals haven’t changed. Even if there is a strike, it will not be allowed to get out of hand because that would be a problem for the whole world.”
Bluechips will outperform in coming sessions as investors rotate out of speculative names into those that have strong earnings growth. Stocks like Emaar Properties, Dubai’s largest developer, is looking attractive at current levels, Khan says. Shares in Emaar fall 3.2 per cent to Dhs5.3.
Small and mid-cap stocks are among the biggest fallers on Wednesday. Air Arabia and Dubai Financial Market slump 6.2 per cent, with Arabtec Holdings and Dubai Investments down 5.6 and 5.3 per cent respectively.
Elsewhere, Abu Dhabi’s benchmark falls 2.3 per cent to 3,648 points, Kuwait’s bourse slips 2.6 per cent to 7,268 points and Qatar’s measure retreats two per cent to 9,348 points. Saudi Arabia’s index is 1.7 per cent lower at 7,697 points.
Gulf markets underperform the MSCI emerging market index, which ticks up 0.2 per cent.