The iShares MSCI UAE Capped ETF (NasdaqGM: UAE) is one of just a small amount of single-country exchange traded funds dedicated to members of the Organization of Petroleum Exporting Countries (OPEC). With oil prices crashing to six and a half year lows, that is not a badge of honor.
UAE is off nearly 15% over the past month and more downside could be awaiting the ETF as stocks in Dubai continue to falter.
Three OPEC member nations – Nigeria, Qatar and the United Arab Emirates – are represented in the world of exchange traded funds by three U.S.-listed, single-country funds. Not surprisingly, these ETFs have been punished as oil prices have plunged in recent weeks.
The oil-induced slides for UAE and the iShares MSCI Qatar Capped ETF (NasdaqGM: QAT) are somewhat confounding when considering neither of those ETFs are excessively weighted to the energy sector, the result of the largest oil companies in those countries being state-run enterprises that are hard to access for foreign investors. [OPEC Country ETFs hit by Oil Slide]
However, few countries depend on oil as a generator of government revenue as OPEC members and the UAE is far from immune to that theme.
“The GCC is home to about 30 percent of the world’s proven oil reserves. West Texas Intermediate slid to $39.86 per barrel on Friday before closing at $40.45 per barrel on the New York Mercantile Exchange, its lowest close since 2009. WTI may decline to $32 on the persisting surplus, Citigroup Inc. said Wednesday. Dubai stocks edged closer to a bear market, having fallen 16 percent since the benchmark measure hit 2015’s peak in April,” reports Bloomberg.
With oil prices sliding, there is speculation that members of the Gulf Cooperation Council (GCC), of which the UAE is one, could be forced to trim government spending, in the process hampering the ability of these economies to withstand lower crude prices.
GCC member countries are home to about 30% of the world’s proven oil reserves, according to Bloomberg.
iShares MSCI UAE Capped ETF
