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UAE Equities Likely to See-Saw in Thin Trade

DUBAI - UAE stocks will trade in narrow ranges next week as investors are likely to remain cautious ahead of fourth-quarter corporate results to be announced by blue chips companies, notably Emaar Properties.

Property and banking sectors will be in focus during the week and their shares may extend their losing streak, as most investors are sceptical about positive announcements in the wake of the global economic downturn.

Analysts said the downtrend will continue until volumes improve. None of the analysts are expecting any major rally through the earning season, as investors, they said, are still not willing to jump into the ring to cash in on the low price opportunities in key shares. The Dubai Financial Market General Index is likely to trade in between 15,000 points to 16,000 points, while Abu Dhabi Securities Exchange index may test the 2,600 level again and may get support at 2,550 points.

Dubai Financial Market and Abu Dhabi Securities Exchange showed mixed trends last week with bearish sentiment prevailing most of the time. Dubai Financial Market’s General Index declined 52.83 points, or 3.19 per cent, last week to 1,599.43 points. It broke the psychological barrier of 1,600 points twice and finally settled just below that barrier amid a lack of positive news from corporate results. The benchmark index may get support at 1,550 points this week amid hope of some positive fourth-quarter results notably from property giant Emaar Properties.

“Barring severe global market weakness I think we should continue to gain back lost ground this week and hopefully we will see figures from Emaar that will restore some confidence to Dubai investors,” Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading, told 
Khaleej Times.

“Earnings season will provide both positive and negative leads, which will keep the market volatile in the short term, probably more with a negative bias,” said another analyst who asked not to be named.

Emaar Hit

In the property sector, Emaar shares remained under selling pressure throughout the week. The company’s shares lost 6.08 per cent, extending past two-week losses to over 12 per cent. Its shares began the week at Dh3.29 and fell below Dh3 level by hitting Dh2.83 on Sunday. Later, it recovered and closed the week at Dh3.09. The shares may test Dh3 level again this week and likely to get support at Dh2.75, as investors are sceptical over positive earnings announcement in the wake of tough economic conditions worldwide.

Arabtec Holding’s shares contracted 3.81 per cent to Dh2.27 amid lack of investor interest since the company had announced a deal with Abu Dhabi-based Aabar Investments. The shares are expected to continue their downslide till the company’s shareholders meeting clear the proposed acquisition deal by mid February.

Deyaar also traded in negative columns and fell 5.56 per cent to DhDh0.51.

In the banking sector, Emirates NBD, Gulf Finance House and Dubai Islamic Bank traded under pressure throughout the week and finally fell into negative columns. Emirates NBD, the biggest bank of the region, tumbled by 5.41 per cent to Dh2.45. It opened the week at Dh2.59, but failed to resist the downslide and closed the week at Dh2.45. The bank’s shares declined more than 10 per cent in past two weeks and may test the Dh2.25 level this week ahead of fourth-quarter results. Gulf Finance House declined 6.61 per cent and ended the week at Dh1.13 while Dubai Islamic Bank fell 4.19 per cent at Dh2.06.

Insurance sector also followed the declining trend last week as major companies fell heavily last week. Dubai Insurance tumbled by 13.95 per cent and closed the week at Dh20.35. Islamic Arabic Insurance Company, or Salama, dropped 6.10 per cent and closed at Dh0.77.In services sector, shares in Shuaa Capital, Gulf General Investment Co and Ekttitab Holding Company recorded a significant decline last week. Shuaa Capital plunged 9.45 per cent to Dh1.15 while Gulf General Investment Co and Ekttitab Holding Company finished the week 5.10 per cent and 5.97 per cent, respectively.

In telecom sector, du shares stood firm and closed the week at Dh2.83.Abu Dhabi Securities Exchange also showed mixed trends with bearish sentiment. The benchmark index of Abu Dhabi Securities Exchange lost 8.56 points, or 0.32 per cent, last week as the shares in banking and real estate sector remained under pressure throughout the week.

The benchmark index broke the psychological barrier of 2,600 points on Tuesday last and then recovered to 2,628.17 points. The index may test 2,600 level again this week and found support at 2,550 points on the back of positive fourth quarter earnings.

“Earnings should start to hit the tape in the next few days, First Gulf Bank reported solid numbers beating estimates. The ADCB stock performance following its results on Tuesday show that significant weakness is already priced into these stocks and as such there is significant upside potential should large caps exceed estimates in the coming weeks,” Wakeman said.

“Improvement and more visibility on earnings will play a crucial role in setting the direction of the market,” another analyst said.

Foreign Investment

Dubai Financial Market said the value of shares bought by foreign investors, or non-UAE nationals, during the week ending January 28, reached Dh839.42 million, comprising 47.63 per cent of the total value of stocks traded during the period. The value of stocks sold by foreign investors during the same period reached Dh954.98 million, comprising 54.19 per cent of the total value of stocks traded during the period. Net foreign investment on the market reached Dh115.56 million during the same period, as aggregate sell.

Institutional Investment

The value of stocks bought by institutional investors during last week reached Dh458.70 million, comprising 26.03 per cent of the total value of stocks traded during the period. The value of stocks sold by institutional investors during the period reached Dh499.75 million which constitutes 28.36 per cent of the total value of stocks traded during the period. Net institutional investment on the market reached Dh41.05 million during the period, as aggregate sell. 


muzaffarrizvi@khaleejtimes.com