Geopolitical tensions, a regional economic slowdown caused by low oil prices, and slumping real estate markets in Dubai and Abu Dhabi all pulled down their stock markets.
Some fund managers expect a better 2018; regional growth is likely to pick up on the back of expansionary state budgets, as the partial rebound of oil prices late this year gives Saudi Arabia and Abu Dhabi room to loosen austerity policies, and Dubai spends heavily to prepare for hosting Expo 2020. Nevertheless, unresolved geopolitical threats - including tensions with Iran, the conflict in Yemen, instability in Lebanon and a boycott of Qatar - will continue to weigh on the region, many fear.
"We see more downside risk for the UAE than we do for Saudi simply because the UAE business model was based on political neutrality and stability," MENA Capital, which invests in equities across the region, said in a report. The Dubai index rose 0.7 percent on Thursday, buoyed in part by construction firms that could benefit from higher government spending on infrastructure next year.
Drake & Scull rose 2.7 percent to 2.26 dirhams in heavy trade. Some analysts believe the stock, which has jumped from around 1.70 dirhams in mid-November, is overvalued, however; earlier this month, Deutsche Bank cut it to "sell" from "hold" with a 1.13 dirham target price.
Builder Arabtec gained 0.9 percent after saying a unit had won a 1.025 billion dirham ($279 million) contract from Dubai Properties, part of the investment vehicle of Dubai's ruler, for work on a residential community. Dubai property developers were also strong, with blue chip Emaar Properties climbing 2.4 percent.
Abu Dhabi's index added 0.7 percent, helped by companies which could benefit directly from this week's surge of oil prices: Dana Gas rose 2.5 percent and fuel distributor ADNOC Distribution gained 1.5 percent. Most other Middle Eastern stock markets will trade for the last time in 2017 on Sunday. In Saudi Arabia, the index rose 0.4 percent on Thursday as most petrochemical firms stayed strong in the wake of the oil price increase. Sahara Petrochemical jumped 3.6 percent after proposing a dividend of 1 riyal per share for 2017, up from 0.75 riyal for 2016.
Qatar's index rose 0.3 percent as Vodafone Qatar, which shot up by more than a third between mid-November and the start of this week, resumed rising in volatile trade and closed 0.9 percent higher.
Copyright Reuters, 2017