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Investors seen defensive on Syria risks

Published: Updated:

Regional investors are set to head into a defensive mode on Sunday after U.S. President Barack Obama delayed an imminent military strike against Syria and said he will seek congressional consent beforehand.

The U.S. released evidence the Syrian government used chemical weapons to attack civilians and said President Bashar al-Assad regime should not go unpunished.

The strike, after a congressional vote, would be in mid-September at the earliest.

In the Gulf, Saudi Arabia has raised its level of military alertness in anticipation of a possible Western strike in Syria, sources told Reuters.

Some local markets lost 5-6 percent of their value last week and volatility is expected to continue in coming sessions.

“Last week, most of the retail clients reached margin calls- expect another 2-3 percent drop on Sunday,” Wael Darwish, head of sales and trading at Mubasher Financial Services said about Dubai’s benchmark, which dropped 5.4 percent in the last five trading sessions.

Investors are likely to shift to defensive stocks - such as Abu Dhabi banks, that pay healthy dividend yields and are expected to have a strong growth in 2013 earnings, Darwish said.

In Egypt, renewed street violence may further add downward pressure on investors’ sentiment. Six people died as thousands of supporters of ousted Islamist president Mohamed Mursi marched through Cairo and cities across Egypt on Friday to demand his reinstatement.

Brent crude for October fell $1.15 on Friday and U.S. shares fell ahead of a long weekend.