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Gulf bourses may weaken as investors book profits

Oil prices slipped on Friday as a stronger US dollar encouraged investors to sell

Published: Updated:

Stock markets in the Gulf may trade with a weak bias on Sunday as short-term traders book profits because of a lack of strong positive catalysts.

Oil prices slipped on Friday as a stronger US dollar encouraged investors to sell, with Brent crude settling down 9 cents at $48.72 a barrel.

“Stock markets in the Gulf are now in an adjustment phase and I believe investors will book profits if there is a lack of other positive stimulus in the market,” said Mohammad al-Shammasi, chief executive of Riyadh-based Derayah Financial.

Dubai’s index, last at 3,230 points, fell on Thursday below technical support on the late March and early May lows of 3,248-3,256 points. A second straight close below that area would confirm a break, triggering a bearish head & shoulders pattern formed by the highs and lows since March and pointing down to the 2,800-point area.

But while bourses in the United Arab Emirates were laggards in the region last week, relatively attractive valuations may limit losses; indexes in Abu Dhabi and Dubai are trading at about 10.0 and 8.0 times trailing earnings, compared to Riyadh’s 12.3 times, and also offer investors strong dividend yields.