By: Mahmoud Gamal

UAE – Mubasher: Emirati banks have cut their monthly investments into debt securities and stocks, data issued by the Central Bank of the UAE (CBUAE) showed.

The banks have reduced their investments into bonds to AED 235.3 billion ($64.05 billion) at the end of June 2019, compared to AED 237.1 billion ($64.54 billion) at the end of May 2019, according to the data.

On an annual basis, banks’ investments into bonds rose by 14.5% or AED 29.3 billion, versus AED 205.5 billion in August 2018.

Moreover, banks have cut their investments into stocks at the end of June to AED 10.4 billion ($2.83 billion), compared to AED 10.5 billion ($2.86 billion) at the end of May.

Banks’ investments into stocks fell by 16.12% or AED 2 billion from AED 12.4 billion in August 2018.

Trade war

Banks within the UAE have recently cut their investments in fixed income securities, which ensures the cautious policy they follow to acquire further liquidity, economist Basel Abu Teima told Mubasher.

This cautious policy indicates that the overall global economy is still not recovered aimed the China-US trade war that has not been settled yet, Abu Teima said.

He also noted that the aforementioned data comes as one of the results of introducing Basel III, which protects and stabilises the banks sector.

Stock markets

Some experts attributed the banks’ contracting investments in stocks to the weak performance of the stock markets over the past years due to the absence of market makers, as well as lack of national investment portfolios that hedge against any price risk.

They also emphasised that the UAE’s economy has improved significantly this year and companies have been strongly operating within the country, which is not positively reflected on the stock markets.

Translated by: Mai Ezz El-Din