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Warning! Stocks around the GCC are taking a hit

The GCC has been struggling recently due to geopolitical problems in the Arab world which translated badly on the GCC stock market. 

The Dubai Financial Market (DFM) index has been registering low results for the past four weeks.

The index lost 55.2 points, or 2.2%, to close at 2,881.8 points in a week, registering its fourth successive weekly decline, according to Surperformance, a website for stock market news.  

The index registered its sharpest percentage fall since June 26, 2016, when it fell 3.16%, as reported by PressReader, a regional website for press releases.

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The most affected sectors

Over the week, the DFM’s trading volume reached 602.15 million shares, while the market’s liquidity hit $220 million, according to Surperformance.

The real estate sector was pulled back by Emaar Properties, which dropped by 4.9%.

The transportation sector went down 2.46%, as Air Arabia sank by 2.5%.

The banks’ sector fell 0.5% after Dubai Islamic Bank lost 1.6%, and Emirates NBD fell by 2.4%.

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On the other hand, DXB Entertainments shares traded higher despite sluggish sentiments elsewhere with heavy volumes. DXB Entertainments closed 0.53% higher, according to PressReader.

“The international investors were selling despite strong fundamentals, which shows that there were external factors at play,” Press Reader reported Mohammad Ali Yasin, CEO at First Abu Dhabi Bank Securities, as saying.

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Is negativity spreading?

According to PressReader, Yasin said: “The issue with our markets is not fundamental in nature.”

“The negative sentiment is continuing. Uncertainty in geopolitical is not helping us, and we are not finding us a positive catalyst,” he added. 

“We are getting into the Ramadan season. We see challenges in terms of liquidity in the next few weeks,” he added.

Traders have been on the sidelines with the traded value falling from a high of more than $272 million to $81-95 million, according to Press Reader.

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Saudi Arabia and Egypt stocks taking a hit

The UAE is not alone, Saudi and Egypt stocks are facing the same troubles, although not with the same impact.

According to Reuters, Saudi closed at its lowest level in more than three weeks. 

The Saudi index dropped 1.7% to 7,878 points, its lowest level since April 15.

Al Rajhi Bank and National Commercial Bank dropped 2.3% and 2.2% respectively, Reuters reported.

The index had risen in early trade to as much as 8,034 points, but sentiment turned sour on news of missiles being shot at the Saudi capital, Reuters said.

Furthermore, Reuters explains that oil prices are pushing higher as the U.S. move may curb crude exports by OPEC member Tehran in an already tight market.

Reuters reported Vrajesh Bhandari, Portfolio Manager at Al Mal Capital, as saying:

“The rise in Brent to a three-and-a-half year high has significant positive implications for oil exporting nations.”

“If crude oil can hold these levels for a while, I think investors would begin factoring in the improving macro fundamentals”