UAE equities bounce back but uncertainty remains
DUBAI FINANCIAL MARKET INDEX UP 1% AFTER FALLING OVER 10% IN PAST SIX SESSIONS
After six consecutive sessions in the red, during which the index shed over 10 per cent and hit two-year lows, the Dubai Financial Market (DFM) index saw a slight recovery yesterday, bouncing back 1.15 per cent.
Reaching a high of 2,937 during trade, the index ended the day at 2,916, still trading in risky areas below the key support level at 3,000. Meanwhile, the Abu Dhabi Securities Exchange (ADX) general index rose 0.64 per cent to 4,026.23.
Markets ‘oversold’
Tariq Qaqish, managing director of asset management at Al Mal Capital, said the UAE’s equity markets remain oversold, with stocks offering reasonable valuations and high dividend yields.
“I think it was expected to see a rebound after the selloff that happened when oil prices dropped a week ago. The sentiment is weak, confidence is lagging, and if oil prices continue to drop, the market will react to that.
“Investors are worried that oil prices could drop below the $30 [Dh110] level, which is not a good story. We don’t expect that but you never know,” he said.
Yesterday, oil prices fell for a seventh straight session, coming close to 11-year lows on the back of growing fears that the global oil slump would worsen in the coming months.
Brent crude fell by 3.4 per cent to below $36.7 a barrel for the first time since December 2008, as West Texas Intermediate (WTI) sank 2.5 per cent below $34.7 a barrel, reports said.
Despite the weight that oil prices have on the region’s markets, Qaqish said geopolitical factors were another concern among investors, particularly the tensions between Turkey and Russia that could escalate in no time. Another key announcement expected this week is the outcome of the US Federal Reserve meetins.
On the DFM, most stocks were in the green, with Emaar gaining 1.75 per cent, Amlak rising 0.88 per cent, and Arabtec share prices going up 3.07 per cent.
Damac and Dubai Islamic Bank were up 2.91 per cent and 1.29 per cent respectively, while Dubai Parks ended flat.
In the capital, RAK Properties topped the gainers’ list with a 4.35 per cent increase followed by Sharjah Islamic Bank with 3.57 per cent, National Bank of Ras Al Khaimah with 2.52 per cent, Abu Dhabi Islamic Bank with 1.94 per cent, and Aldar Properties with 1.82 per cent.
Of the 32 stocks traded on DFM, 22 went up, five went down, and five remained unchanged. Of the 27 stocks traded on ADX, 12 advanced, seven declined, and eight remained flat.