UAE equities buck global downtrend in August

The UAE financial markets bucked the global and regional downtrend in equities last month, a recent report showed.

According to Kamco Invest’s GCC Markets Monthly report, GCC equity markets witnessed its first decline in three months taking cues from the worst monthly performance in global equity markets this year.

Despite a second half recovery, the MSCI World index was down 3.6 per cent during August-2023 after a hawkish Fed led to fears of higher for longer rates with some economists even pricing-in another rate hike this year and the first cut deep into next year. Weak data coming from China also affected sentiments across the board that got exacerbated by probability of a continued rate hike by the ECB in September-2023. China’s economic activity continued to slide with manufacturing activity contracting for the fifth consecutive month as government reforms and new targeted policies are yet to have a meaningful impact on markets and sentiments.

The MSCI GCC Index witnessed a slightly steeper decline of 3.8 per cent during the month led by fall in four out of seven exchanges, including in Saudi Arabia. The decline came despite oil seeing gains for the third consecutive month on supply cuts and steady demand data. Qatar was the worst performing market in the GCC during August-2023 with a slide of 7.0 per cent led by decline in almost all indices on the exchange. Kuwait and Bahrain followed with declines of 3.4 per cent and 2.0 per cent while Saudi’s TASI was down by 1.7 per cent. The declines in Qatar wiped off all gains since the start of the year to report the biggest decline in the GCC at 4.6 per cent followed by Abu Dhabi and Kuwait both at 3.9 per cent declines. On the other hand, Dubai was the best performing market with a YTD-2023 gain of 22.4 per cent followed by Saudi Arabia at 9.7 per cent.

The GCC sector chart showed declines in most sectors with Healthcare leading at –11.6 per cent followed by F&B and Telecom. Banks and Material were down by 3.9 per cent and 2.9 per cent, respectively, while Insurance and Energy showed gains of 5.9 per cent and 4.4 per cent, respectively.

While the DFM General Index gained by 0.6 per cent last month, the FTSE ADX index rose 0.2 per cent.

The DFM General Index witnessed a monthly gain of 0.6 per cent during August-2023 to close at 4,082.87 points registering its fifth consecutive monthly gain. Monthly index performance was mixed during the month after five out of the eight indices witnessed declines during August-2023 while the remaining three indices saw gains to offset the overall decline during the month.

The Consumer Staples Index recorded the biggest monthly gain for the second month running registering 7.4 per cent growth to close the month at 153.2 points mainly driven by Emirate Refreshments’ nearly 6.9 per cent price gain during August-2023. The Industrial index followed as the second largest gainer during the month with 4.5 per cent growth after the sector’s three constituent companies led by Air Arabia Company recorded a 9.7 per cent share price rise during August-2023. The Real Estate index also saw a gain of 2.7 per cent to close the month at 6,865.6 points mainly driven by an 18 per cent share price jump for Al Mazaya Holding Company. The Communications Services index was the biggest decliner among the indices recording 3.6 per cent decline during the month to close the month at 898.0 points.

According to monthly stock performance from Bloomberg, Al Mazaya Holding led the monthly gainers table with 18 per cent increase in share price followed by Emirates Investment Bank and Ekttitab Holding Properties with gains of 11.2 per cent and 11 per cent, respectively. On the decliner’s side, Takaful Insurance Co. topped the table recording a share price decline of 25.6 per cent during the month followed by Aramex and Dubai Islamic Insurance Co. with share price declines of 15.3 per cent and 13.3 per cent, respectively.

Trading activity in the DFM declined during August-2023. Total volume traded fell by 41.3 per cent to reach 5.3 billion shares as compared to 9.1 billion shares during July-2023. The total value of shares traded during the month also witnessed a 13.8 per cent drop to reach Dh9.9 billion in August-2023 as compared to Dh11.5 billion during July-2023. Union Properties topped the monthly volumes traded chart for the second month running recording 1.2 billion shares which changed hands during the month followed by Ajman Bank and Shuaa Capital which saw 570.6 Mn and 476.4 Mn of their shares change hands during the month, respectively. On the monthly value traded chart, Emaar Properties topped the list with Dh1.6 billion worth of shares changing hands during the month, followed by Ajman Bank and Emirates NBD which saw Dh1.3 billion and Dh1.27 billion value of their shares traded, respectively.

In economic news, Dubai’s economic growth in 2023 accelerated supported by strong tourism numbers and robust real estate market. Dubai’s Real GDP recorded a 2.8 per cent y-o-y increase during Q1-2023. According to UAE government data Dubai’s economy reached Dh111.3 billion ($30.3 billion) maintaining the strong growth of 2022 when the UAE economy expanded by 4.4 per cent. Dubai’s robust first quarter performance was attributed to the city’s strong fundamentals, sustainability, and resilience. In terms of the contribution of the sectors of the economy, Dubai’s Transportation and Storage Sectors were the highest contributors witnessing an overall growth rate of 48 per cent. The Financial and Insurance sectors followed, recording growth of 15 per cent and 10 per cent growth respectively. On the other hand, the DFM witnessed the creation of over 34,800 new investor accounts for the first eight months of 2023 vs. 23,000 new investor accounts during the corresponding period of 2022.

The FTSE ADX index edged up by 0.2 per cent during August-2023 closing the month at 9,810.2 points and recording its third consecutive monthly gain. In terms of sectoral indices, the picture was even as five out of the ten sectors recorded growth during the month while the remaining five recorded declines.

On the gainers’ side, the Healthcare index witnessed the biggest monthly gain registering 19.3 per cent growth to close the month at 3,607.9 points mainly due to Burjeel Holding’s 27.5 per cent share price growth during August-2023. The Consumer Discretionary index followed with 11.7 per cent index gain to close the month at 9,131.1 points mainly due to the 17.3 per cent share price gain of Abu Dhabi National Hotels Co. Three out of the five constituent companies of the Consumer Discretionary sector witnessed gains in share prices during the month.

On the decliners’ side, the Telecommunications index led the way with a 10.8 per cent slide during the month to close the month at 4,946.2 points followed by the Consumer Staples index which witnessed a 3.4 per cent fall during August-2023. Three out of the four companies in the Telecom index witnessed share price declines during the month including Ooredoo (-11.6 per cent) and Etisalat (-11.4 per cent). In terms of monthly stock performance, Burjeel Holdings topped the monthly gainers chart for August-2023 with a gain of 27.5 per cent followed by Waha Capital and Umm Al Qaiwain General Investment Co which recorded gains of 23.5 per cent and 22.5 per cent, respectively. Burjeel Holdings recorded 47 per cent higher profits in H1-2023 which reached Dh213.7 Mn due to revenue increase of the Burjeel’s Medical City.

On the decliner’s side, Ooredoo lead the way registering 11.5 per cent fall in its share price during August-2023 followed by Etisalat and Eshraq Investments which saw share price declines of 11.4 per cent and 9.9 per cent, respectively.

Trading activity increased m-o-m for the second consecutive month during August-2023. Total volume of shares traded rose by 4.1 per cent in August-2023 to reach 5.4 billion as compared to 5.2 billion in July-2023. Similarly, total value of traded increased by 15.5 per cent to reach Dh23.3 billion.

Multiply Group topped the list of the most active stocks table during the month with 843 Mn traded shares followed by RAK Properties and Eshraq Properties which traded 531.5 Mn shares and 503.7 Mn shares, respectively. In terms of value traded, IHC topped the table for the seventh month in a row with Dh4.9 billion worth of shares changing hands during the month followed by Multiply Group and Alpha Dhabi Holding at Dh3.1 billion and Dh2.6 billion, respectively.

In economic news, the UAE non-oil foreign trade reached its highest ever point at $337.6 billion during the first half of 2023 recording a 14.4 per cent y-o-y growth rate. Underlining the fruits of the Emirates’ economic diversification policies as the country continues its drive to diversify the economy from the over reliance on hydrocarbon exports. During the period, China topped the UAE’s table of top global trading partners followed by India, USA, Saudi Arabia and Turkey. The UAE’s total non-oil exports increased by 11.9 per cent to reach Dh205 billion ($55.8 billion) during 1H-2023, while the total value of re-exports and imports also witnessed a 9.9 per cent to $92.8 billion. According to UBS, the economy is poised to expand 3.5 per cent in 2023 and 3.9 per cent in 2024 mainly driven by strong demand for the Emirates hydrocarbon exports and energy investments. The UAE introduced a 9 per cent corporate tax in 2023 on the back of 5 per cent VAT in 2018. These tax measures are poised to support the Emirates public finances as well as reduce the economy’s reliance on energy exports.

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