UAE markets unmoved amid global stock slide due to fears of Greek euro exit

UAE markets emerged relatively unscathed from a global stock rout yesterday triggered by the collapse of Greek debt talks and China entering a bear market.

Asian stock markets tumbled yesterday morning, after Greece closed its banks and imposed capital controls, raising fears among international investors that the country may be forced to quit the euro.

Japan’s Nikkei 225 fell by 2.9 per cent to 20,109.95, its lowest close since June 19, while Hong Kong’s Hang Seng fell 2.6 per cent to 25,966.98.

A Greek exit from the euro zone could have a significant effect on trade and increase turbulence in the region’s financial markets, and could lower GDP growth in the Asia-Pacific region by as much as 0.3 per cent next year, according to Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight.

In China, the central bank’s decision to cut interest rates failed to halt a sell-off of equities by leveraged investors, sending the bourse into a bear market. The Shanghai Composite Index closed down 3.3 per cent, 20 per cent off its June 12 peak.

However, the effect was barely felt in the UAE and the wider Arabian Gulf. Dubai’s headline index fell just 0.3 per cent, with shares in Abu Dhabi down by 0.83 per cent, amid trading volumes at average levels on both bourses.

“People think there may be more problems ahead, but the market so far has not priced the effect in,” said Khaldoun Jaradat, trading manager at Brokerage House Securities in Dubai.

He said a Ramadan slowdown and an absence of buying triggers explained the lacklustre trading.

Shares in Etisalat acted as the main drag on Abu Dhabi’s headline index, as retail investors digested the effect of the operator’s announcement on Sunday that it would take a hit of Dh616 million before federal royalty because of further accounting changes at its Saudi unit Mobily. The operator’s shares fell 2.88 per cent to Dh13.50.

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