UAE stocks start 2019 with gains on rising confidence

Stock markets in the UAE recorded gains in January after a prolonged lull in 2018, signalling the return of optimism and rise in business confidence.
In Dubai, while the gains were largely broad-based with a majority of the sectors recording a surge, in Abu Dhabi, increases were mainly concentrated in banking and telecom stocks as the two sectors witnessed positive performances.
A Kamco Investment Company research report said the GCC market activity followed global cues and were largely positive.
The MSCI GCC index closed the month with a return of 7.4 per cent after all GCC benchmarks showed growth during the month barring Oman. Tadawul was the best-performing market during the month with a return of 9.4 per cent followed by Qatar at 4.1 per cent.
The Research titled, 'GCC Markets Monthly Report - Jan-19' said GCC markets also got support from positive earnings announcements from some of the large-cap stocks in the region.
"The sector performance chart in the GCC also reflected the positive earnings trend in the GCC. Banks continued to attract investor interest in the GCC following outperformance during last year. Within the banking sector, Saudi banks topped the chart with double-digit gains. The food and beverage sector was also positive during the month, recording double-digit gains after a relative underperformance during most of 2018," Kamco said.
In Abu Dhabi, ADX witnessed gains for the second consecutive month in January with the benchmark ADX General Index gaining 4.5 per cent during the month. The banking index topped the monthly sector performance chart with a gain of 5.5 per cent while gains for the telecom index were marginal at 0.2 per cent. Performance within the banking sector was also largely positive with ADCB shares gaining almost 15 per cent during the month followed by Union National Bank and Abu Dhabi Islamic Bank with gains of 10.9 per cent and 8 per cent, respectively.
In Dubai, the DFM index witnessed a marginal gain of 1.5 per cent during January after declining for the last five consecutive months of 2018. The consumer staples index topped the monthly sector performance chart with a gain of 12.5 per cent on the back of 14.6 per cent surge in shares of DXB Entertainment that was partially blunted by a 10 per cent decline in shares of Dubai Refreshments. Shares of DXB Entertainment attracted investor interest after the company showed improved fundamentals in addition to the stock being oversold after seeing two consecutive years of decline in which the share price fell from Dh1.3 at the end of 2016 to around Dh0.233 per share at the end of 2018.
The banking index was next with a gain of 7.8 per cent after healthy gains in large-cap banking stocks were partially offset by declines in shares of some of the smaller banks.
In its outlook on GCC markets for the full year of 2019, Kuwait Financial Centre (Markaz) said amid muted growth expectations in global markets, economic outlook for the GCC as a whole remains positive, as the surge in oil revenues and fiscal reforms of past years will provide the necessary cushion for GCC countries to support economic growth through capital expenditure.
"Although the recovery in oil prices did not last the entirety of the year, GCC economies witnessed a sizeable increase in oil revenues. Their fiscal and external balances started to recover after three lackluster years with only Bahrain and Oman running twin deficits in 2018. With the exception of Bahrain, where there is weakness in govern," it said. In the UAE, corporate earnings were up by 13.3 per cent for the nine months of 2018, compared to the same period in 2017. According to the latest IMF estimates, UAE's GDP growth is expected to be 3.7 per cent higher in 2019.
"Given large fiscal buffers, ample spare capacity and rising investment needs for Expo 2020, the government has appropriately switched to providing stimulus to the economy. The introduction of VAT in 2018 has been a historic milestone and is expected to substantially strengthen and diversify government revenues in the coming years," the Markaz report said. - issacjohn@khaleejtimes.com