Selloff on the UAE and GCC stock markets continued despite efforts by the regional and global governments to support economies through stimulus packages and rate cuts.
The UAE's two bourses - Dubai and Abu Dhabi - were down over three per cent in the morning trade. while other regional equity markets were also trading negative with Saudi Arabia's Tadawul down 2.5 per cent, Boursa Kuwait falling 1.3 per cent, Muscat Securities Market losing 1.1 per cent and Bahrain Bourse falling 1.5 per cent. Qatar bucked the trend, rising 2.7 per cent in the morning trade.
The growing cases of coronavirus in the region and persistent decline in oil prices are keeping the investor confidence shaky. Oil prices were also down by nearly five per cent on Monday. Brent was trading at $33.68 per barrel, down by $1.76 or five per cent while WTI was down $1 or 3.3 per cent on Monday afternoon.
On Monday, Abu Dhabi government also announced a stimulus package while the UAE Central Bank on Saturday pushed a Dh100 billion support package for the banks and other key strategic sectors to support them in tough times.
Stock markets in Asia were roiled on Monday despite the Federal Reserve slashed interest rates in an emergency move and its major peers offered cheap US dollars to break a logjam in global lending markets.
MSCI's index of Asia-Pacific shares outside Japan slid 2.4 per cent to lows not seen since early 2017, while the Nikkei eased 0.4 per cent. Shanghai blue chips fell 1.5 per cent even as China's central bank surprised with a fresh round of liquidity injections into the financial system.
On the global level, the Federal Reserve made an extraordinary move to safeguard the economy from the impact of Coronavirus by dropping its benchmark interest rate from 0.25 per cent to 0 per cent. In addition to this, the Fed has relaunched its quantitative easing programme and will buy $700 billion worth of assets that entail Treasuries and mortgage-backed securities
"The world is facing a pandemic. These are extraordinary times, and we need extraordinary measures. However, these measures have failed to calm to the markets and once again we have started the week in a major turmoil. This is because cutting the interest rate to zero and restarting the quantitative easing package has send shockwaves," said Naeem Aslam, chief market analyst at Ava Trade.
