Dubai's benchmark fell to a one-week low and most Gulf bourses also declined yesterday, with investors reluctant to hold big positions ahead of a long weekend that includes elections in Egypt and Greece.

Egypt will return to the polls on June 16-17 to choose a new president and investors hope a peaceful vote will boost Cairo stocks next week, while a leftist victory in Greece’s election could ultimately force the country out of the euro.

“We’re being held hostage to international market performance - it’s one day up and then one day down, which is confusing everyone,” said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments.

“It’s all about the Greece elections — whether the conservative or anti-austerity parties win will be a major decider of market direction.”

Dubai’s benchmark dropped 1 percent to its lowest finish since June 6.

“There’s still buying, but it’s very selective — either defensive or opportunistic,” said Shurrab.
Air Arabia fell 0.3 percent to be within 5 percent of June 3’s two-year low. The budget carrier accounted for nearly half of total volumes, which were barely a tenth of the 2012 peak.
“There’s institutional money coming in at these levels, taking positions that would provide high dividend yields instead of staying in cash,” added Shurrab.

Qatar’s index slipped 0.1 percent to an eight-month low of 8,252 points.
Qatar National Bank fell 0.2 percent and Qatar Telecom dropped 1.3 percent.
Trading volumes hit an 11-month low on Wednesday and activity remains muted.

“The market’s decline has been on low liquidity - there’s no panic selling, but also no willingness to take new positions,” said Omnia Ashmawy, a Doha-based technical analyst.

The index broke through a major support at 8,350 points, Ashmawy said. This now acts as a resistance level, while new support is at 8,150.

“The market will move within this range for a while - foreign investors are worried about international markets, while Qatari investors don’t want to buy because their of summer vacations,” said Ashmawy.

The market slump came as Saudi Arabia’s index made an early-year surge, with investors selling out of Qatar to increase their exposure to Riyadh stocks while a lack of company news and a summer trading lull make an imminent rebound unlikely.

These factors also mean long-term investors feel no urgency to buy now because they expect share prices to fall further, Ashmawy added.

Kuwait’s index slumped to a four-month low after declining for a fourth day following further political turmoil.

Infighting between the parliament and government has forced the resignation of two cabinet ministers in less than a month and threatens to draw in more of their cabinet colleagues, with this dispute helping to derail a 30 billion dinar ($ 107 billion) state development plan that investors had previously bet would provide local banks with risk-free earnings.

Kuwait Finance House dropped 1.4 percent to equal a two-year low and Ahli United Bank slipped 1.2 percent.

Markets in Oman, Kuwait and the United Arab Emirates will be closed yesterday.