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Dubai stocks end 2018 on a sluggish note Boursa Kuwait buoyant; global equities lackluster

LONDON: World stock markets staggered yesterday towards the end of their worst year since the global financial crisis a decade ago, rocked by rising interest rates, the global trade war and Brexit fears.

DUBAI: Dubai’s stock market ended 2018 yesterday with a 25-percent annual loss, the worst year since the global financial crisis a decade ago, as the real estate and tourism sectors struggled. The plunge in the Dubai Financial Market Index was the biggest among Gulf and Arab bourses amid signs of a slowdown in the emirate’s highly diversified economy. But it was not as bad as in 2008 when the Dubai stock market dived 72 percent after the financial crisis triggered a debt problem for the emirate.

Boursa Kuwait ended 2018 trading in the green zone as the premier market index rose by 0.14 points to reach 5079.5 points. The main market index rose by 15.4 points to reach 4738.5 points, same as all share market index went up by 3.2 points to stand at 5267.3 points. The value of trades was at KD 17.9 million with the volume reaching KD 140.4 million shares done through 4,716 deals.

In 2018 Oman’s small bourse dropped 15 percent while stock markets in other energy-rich Arab Gulf monarchies ended the year in positive territory, buoyed by an increase in oil prices. The Qatar Stock Exchange led the gainers with a 21-percent rise despite an 18-month-old economic and political blockade by its neighbors led by Saudi Arabia.

The Saudi stock market, the largest in the Arab world, ended the year up 8.3 percent despite dipping to a three-year low in October after Saudi journalist Jamal Khashoggi was murdered in the kingdom’s Istanbul consulate. In December, the Dubai Financial Market Index dropped to a five-year low before slightly recovering to close the year at 2,529.75 points.

The stock market’s dive was attributed to a sharp drop in real estate sales and prices due to oversupply and weak demand. The property market, which makes up around 13 percent of Dubai’s gross domestic product, has been in decline since 2014 but its slide accelerated in 2018.

In the third quarter alone, the price of houses dropped 7.4 percent in Dubai, according to the UAE central bank, after declining by more than six percent in the first half of 2018. Shares in Emaar Properties, the largest developer in the Middle East, lost almost half their value over the past year, mirroring sharp falls for the sector as a whole.

Economic growth in Dubai, which is not directly dependent on oil, is expected to have slowed to 2.3 percent in 2018, from 2.8 percent the previous year, according to the central bank. A glut of housing units and weak demand are also key reasons for the property market downturn, the Standard and Poor’s ratings agency said earlier this year.

Meanwhile, world stock markets staggered yesterday towards the end of their worst year since the global financial crisis a decade ago, rocked by rising interest rates, the global trade war and Brexit, dealers said.

London and Paris wobbled in holiday-shortened trade on New Year’s Eve-but nursed dizzying double-digit annual falls after an exceptionally volatile 2018. Hong Kong rose yesterday after US President Donald Trump hailed “big progress” on resolving Washington’s trade war with Beijing, but was down almost 14 percent over the year. Equities have been hammered in 2018 by tighter monetary policy-from both the US Federal Reserve and also the European Central Bank, which halted its quantitative easing stimulus policy this month.

“Global stocks are set for their worst year since the financial crisis, thanks to the tightening monetary policies adopted by several central banks around the globe-especially the Federal Reserve and the ECB,” said ThinkMarkets analyst Naeem Aslam. “The Fed stopped printing easy money a few years back and increased interest rates four times this year. “The ECB also ended its quantitative easing program and there has been discussion on … normalizing interest rates.” The Bank of England meanwhile hiked British interest rates in August for the second time since the financial crisis to help tame inflation, despite worries that Brexit could wreak havoc on the economy.

‘America First’

Sentiment was also slammed by US President Donald Trump’s ‘America First’ trade policy which has sparked a damaging trade war with China and others. Wall Street did however mark the longest-ever “bull market” in August, a run that began amid extraordinary crisis-era monetary policy-but for which Trump has claimed credit after his tax cuts and regulatory rollbacks.Yet markets have since spiralled lower on slowing global growth, Italy’s fiscal woes, a US government shutdown and Trump’s attacks on the Fed.

Investors also ran for cover as the uncertain nature of Britain’s looming exit from the European Union in March 2019 casts a long shadow.

“Stock markets have been on a wild ride this year and the United States has been at the center,” Oanda analyst Craig Erlam said. “Tax reforms hugely boosted earnings, bringing an economic boost with it,” he said.

However, “the trade war with China and skirmishes elsewhere have weighed heavily on the relevant domestic markets which has dented investor sentiment.” Washington and Beijing imposed tit-for-tat tariffs on more than $300 billion worth of goods in total two-way trade earlier this year, locking them in a conflict that has begun to eat into profits and contributed to stock market plunges.

In Europe yesterday, London’s benchmark FTSE 100 index dipped 0.1 percent to finish at 6,728.13 points, marking a sharp annual loss of 12.5 percent. The Paris CAC 40 climbed 1.1 percent to end at 4,730.69 points-which was drop of nearly 11 percent for the year. Many investors were away for Christmas and New Year holidays, while trading hubs including Frankfurt, Rome, Tokyo, Shanghai and Seoul were shut.

Return to recession?

“2018 has been characterized by a shift from low volatility, high liquidity and expectations of equity out-performance to high volatility, low liquidity and the return of a bear market in equities,” said VTB Capital economist Neil MacKinnon. “For 2019, a global economic slowdown-perhaps recession-looks increasingly likely,” he warned. Key Asian markets also limped towards the end of the year in bear market territory-meaning that they are 20 percent below their most recent peaks. Tokyo’s benchmark Nikkei index had rounded out 2018 on Friday with its first annual loss since 2011, and Shanghai became the worst-performing major global stock market, dropping by nearly a quarter. – Agencies

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