Regional stock markets fall amid growing Ukraine concerns

04 March 2014

Egypt, Kuwait and the UAE registered largest losses following concerns over the Russia-Ukranian conflict

Regional stock markets fell on 3 March following growing concerns over the Russia-Ukranian conflict shifting into a military confrontation.

The Egyptian Exchange, Kuwait Stock Exchange, Dubai Financial Market and Abu Dhabi Securities Exchange were the day’s top losers, registering decreases of 2.68 per cent, 1.92 per cent, 1.88 per cent and 1.75 per cent respectively.

The Saudi Stock Exchange (Tadawul) ended the day 0.8 per cent lower, while Qatar Exchange fell 0.9 per cent. Bahrain Bourse dropped 0.4 per cent and Muscat Securities Market 0.3 per cent.

That followed three months of growth for many markets, led by Dubai (up 25 per cent year-to-date), Egypt (up 20 per cent), Abu Dhabi (up 16 per cent) and Qatar (up 13 per cent). Saudi Arabia and Kuwait lag behind, registering gains of 7 per cent and 2 per cent respectively.

The decreases on 3 March were part of a global trend as investors moved away from riskier assets.

Political unrest in countries such as Thailand, Turkey and Venezuela, combined with the effect of the US’ Federal Reserve’s scaling back of its bond purchasing programme is leading to volatility in emerging markets. These factors combined have prompted investors to opt for safer assets such as currencies, treasuries and gold instead of stocks.

The Standard & Poor’s 500 index, which tracks the US’ largest companies, went down 0.74 per cent despite the release of positive economic data.

While there is growing concern over emerging markets, the Ukraine conflict is unlikely to bring about a massive crisis.

Ukraine’s economy does not have a major effect on its neighbours, and some analysts point out that the stock exchanges’ drops mainly represent market jitters instead of economic fundamentals. In addition, it is possible Russia could opt for a cold war scenario in Ukraine rather than escalate the conflict into a full-blown war.

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