DUBAI: Dubai'sstock market ended 2018 yesterday with a 25-percent annual loss, the worst yearsince the global financial crisis a decade ago, as the real estate and tourismsectors struggled. The plunge in the Dubai Financial Market Index was thebiggest among Gulf and Arab bourses amid signs of a slowdown in the emirate'shighly diversified economy. But it was not as bad as in 2008 when the Dubaistock market dived 72 percent after the financial crisis triggered a debtproblem for the emirate.
Boursa Kuwaitended 2018 trading in the green zone as the premier market index rose by 0.14points to reach 5079.5 points. The main market index rose by 15.4 points to reach4738.5 points, same as all share market index went up by 3.2 points to stand at5267.3 points. The value of trades was at KD 17.9 million with the volumereaching KD 140.4 million shares done through 4,716 deals.
In 2018 Oman'ssmall bourse dropped 15 percent while stock markets in other energy-rich ArabGulf monarchies ended the year in positive territory, buoyed by an increase inoil prices. The Qatar Stock Exchange led the gainers with a 21-percent risedespite an 18-month-old economic and political blockade by its neighbors led bySaudi Arabia.
The Saudi stockmarket, the largest in the Arab world, ended the year up 8.3 percent despitedipping to a three-year low in October after Saudi journalist Jamal Khashoggiwas murdered in the kingdom's Istanbul consulate. In December, the DubaiFinancial Market Index dropped to a five-year low before slightly recovering toclose the year at 2,529.75 points.
The stockmarket's dive was attributed to a sharp drop in real estate sales and pricesdue to oversupply and weak demand. The property market, which makes up around13 percent of Dubai's gross domestic product, has been in decline since 2014but its slide accelerated in 2018.
In the thirdquarter alone, the price of houses dropped 7.4 percent in Dubai, according tothe UAE central bank, after declining by more than six percent in the firsthalf of 2018. Shares in Emaar Properties, the largest developer in the MiddleEast, lost almost half their value over the past year, mirroring sharp fallsfor the sector as a whole.
Economic growthin Dubai, which is not directly dependent on oil, is expected to have slowed to2.3 percent in 2018, from 2.8 percent the previous year, according to thecentral bank. A glut of housing units and weak demand are also key reasons forthe property market downturn, the Standard and Poor's ratings agency saidearlier this year.
Meanwhile, worldstock markets staggered yesterday towards the end of their worst year since theglobal financial crisis a decade ago, rocked by rising interest rates, theglobal trade war and Brexit, dealers said.
London and Pariswobbled in holiday-shortened trade on New Year's Eve-but nursed dizzyingdouble-digit annual falls after an exceptionally volatile 2018. Hong Kong roseyesterday after US President Donald Trump hailed "big progress" onresolving Washington's trade war with Beijing, but was down almost 14 percentover the year. Equities have been hammered in 2018 by tighter monetarypolicy-from both the US Federal Reserve and also the European Central Bank,which halted its quantitative easing stimulus policy this month.
"Globalstocks are set for their worst year since the financial crisis, thanks to thetightening monetary policies adopted by several central banks around the globe-especiallythe Federal Reserve and the ECB," said ThinkMarkets analyst Naeem Aslam."The Fed stopped printing easy money a few years back and increasedinterest rates four times this year. "The ECB also ended its quantitativeeasing program and there has been discussion on ... normalizing interestrates." The Bank of England meanwhile hiked British interest rates inAugust 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 wasalso slammed by US President Donald Trump's 'America First' trade policy whichhas sparked a damaging trade war with China and others. Wall Street did howevermark the longest-ever "bull market" in August, a run that began amidextraordinary crisis-era monetary policy-but for which Trump has claimed creditafter his tax cuts and regulatory rollbacks.Yet markets have since spiralledlower on slowing global growth, Italy's fiscal woes, a US government shutdownand Trump's attacks on the Fed.
Investors alsoran for cover as the uncertain nature of Britain's looming exit from theEuropean Union in March 2019 casts a long shadow.
"Stockmarkets have been on a wild ride this year and the United States has been atthe center," Oanda analyst Craig Erlam said. "Tax reforms hugelyboosted earnings, bringing an economic boost with it," he said.
However,"the trade war with China and skirmishes elsewhere have weighed heavily onthe relevant domestic markets which has dented investor sentiment." Washingtonand Beijing imposed tit-for-tat tariffs on more than $300 billion worth ofgoods in total two-way trade earlier this year, locking them in a conflict thathas begun to eat into profits and contributed to stock market plunges.
In Europeyesterday, London's benchmark FTSE 100 index dipped 0.1 percent to finish at6,728.13 points, marking a sharp annual loss of 12.5 percent. The Paris CAC 40climbed 1.1 percent to end at 4,730.69 points-which was drop of nearly 11percent for the year. Many investors were away for Christmas and New Yearholidays, while trading hubs including Frankfurt, Rome, Tokyo, Shanghai andSeoul were shut.
Return torecession?
"2018 hasbeen characterized by a shift from low volatility, high liquidity andexpectations of equity out-performance to high volatility, low liquidity andthe return of a bear market in equities," said VTB Capital economist NeilMacKinnon. "For 2019, a global economic slowdown-perhaps recession-looksincreasingly likely," he warned. Key Asian markets also limped towards theend of the year in bear market territory-meaning that they are 20 percent belowtheir most recent peaks. Tokyo's benchmark Nikkei index had rounded out 2018 onFriday with its first annual loss since 2011, and Shanghai became theworst-performing major global stock market, dropping by nearly a quarter. -Agencies