Iran war drags UAE stock markets to three-month lows

• Third successive daily decline
• Investors sell before weekend
• Saudi stocks outperform

UAE stock indexes slid to three-month lows on Friday, declining for a third straight session as nervous investors sought to cut their market exposure ahead of the weekend.

Selling pressure had weakened in late Thursday trading, but intensified on Friday. The Dubai Financial Market dropped 3.1 percent to 5,924 points, while the Abu Dhabi Securities Exchange fell 1.4 percent to 9,903 points, their lowest close since early December.

Dubai’s index is down 8.9 percent in the three days since trading resumed following the outbreak of a regional war pitting the US and Israel against Iran. Abu Dhabi’s benchmark has lost 5.3 percent during the same period.

“Much of today’s selling pressure is because no one wants to hold the risk over the weekend,” said a UAE-based trader, who spoke on condition of anonymity.

“If the situation eases, we might start to catch some bids [to buy stocks] on Monday, but if something drastic happens then it will be another negative day for markets.”

The regulator’s decision to close UAE bourses on Monday and Tuesday and to temporarily reduce the maximum downward price movement to 5 percent – usually it is 10 percent – has worsened selling pressure, said the trader.

“The best thing to do in a situation like this is for the market to fall naturally to a level where bottom-fishers step in,” he said. “The artificial constraints add to the panic.”

Further reading:

• Oil eases after Iran conflict sends WTI above $81
• How to gauge the UAE’s economic resilience amid war in Iran
• Iran conflict sends UAE developer bonds tumbling

Selling pressure was concentrated on sectors most likely to be hurt by the ongoing war, including real estate, tourism and aviation, said the trader.

Dubai’s Emaar Properties fell 4.8 percent, its third straight near-maximum decline. It hit a 21-year peak in early February. The emirate’s top real estate developer derives about one-fifth of its revenue from its malls, hospitality and entertainment division.

“People are dumping Emaar because it’s such an over-held stock,” added the trader.

In Abu Dhabi, government-backed Aldar Properties again headed losses, declining nearly 5 percent.

Saudi Arabian stocks have outperformed this week, with Riyadh’s index up 0.6 percent. Saudi Aramco hit an 11-month high on Tuesday, as investors bet surging oil prices would translate into higher profits.

Aramco can re-route much of its crude output to a Red Sea port via a pipeline, circumventing an Iranian effective blockade of the Strait of Hormuz.

The Qatar and Kuwait benchmarks dropped 3.2 and 0.5 percent respectively this week.