29/06/2016 12:17 AST
Over the past weeks, as Brexit has loomed, UAE financial authorities have repeatedly reassured investors that Brexit would have little negative impact on their banks or economy, and now signs are emerging that appear to concur with this assessment.
After European stocks surged, the UAE equity market indices mirrored this movement, a welcome omen for those traders who felt a rising fear for their future. With the Dubai Financial Market (DFM) index and the Abu Dhabi Securities Exchange (ADX) general index both showing growth, investors rejoiced.
But was their joy premature? Here, we explore what this movement really means for the UAE markets…
Market Growth
On Tuesday 21st June, the markets of the UAE surged. Both the DFM, and its counterpart the ADX, rose, by 1.13 per cent and 0.5 per cent respectively. This took their totals to an impressive 3,343.43, and 4,503.49, promising figures for those with a vested interest in their performances.
These increases seemed to be a direct response to similar gains on the FTSE 100, which grew by over 3 per cent. This trend was seen across European markets, with Germany’s DAX also rising by 3.43 per cent.
At the same time, the pound gained momentum too, jumping by 2 per cent against the dollar. This growth symbolised its highest daily growth since the financial crisis of 2008.
Yet we know that the outlook for Europe has since changed. At the time of these gains, the latest poll was showing an increased lead for the remain campaign, which proved to be inaccurate when the final vote came in. This saw
sterling fall to a 31-year low, and the FTSE 100 go into freefall.
Although the final assessment cannot yet be made, the importance of this should not be underestimated.
Investor Appetites
Even with these positive statistics for the European markets, brokers like IG reported a lack of investor appetite in the UAE. Failing to be taken in by (what would later prove to be false) improved sentiment in Europe, only Dh184.9 million was traded in Dubai. Less than half of this amount (Dh 78.3million) entered the markets in Abu Dhabi.
To provide a marker stick by which to assess these figures, this is less than a third of the lowest daily average, which is Dh200 million and Dh700 million for Abu Dhabi and Dubai respectively.
According to expert Marwan Shurrab, however, these numbers are not as catastrophically low as they seem. They can in fact be attributed to Ramadan, which prompts many investors to stay on the side lines for a time.
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Press Release
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