Jittery retail investors are causing heightened volatility on Gulf exchanges, say analysts, as sentiments remain low and focused on short-term prospects. The Dubai Financial Market (DFM), the world’s third worst-performing market last year, fell 1.05 per cent to 1,520.24, its lowest close since June 2004. The Abu Dhabi Securities Exchange (ADX) declined 0.2 per cent to a value of 2,255.85.
“Volatility is in effect being created by the retail investors. Institutional participation has shrunk in the past six months, so the market is now mainly driven by [retail investors] who typically have short-term plans,” said Amro Diab, the head of GCC institutional sales at EFG Hermes. “They hold shares for short periods, an hour or a week, and when the stock rebounds they quickly offload.”
Property stocks led declines as analysts maintained forecasts that property prices in the UAE this year would continue to soften. A report by HSBC Holdings this week stated that Dubai property prices had dropped 23 per cent from a September peak.
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