Beaten-down Dubai stocks offer good value for investors

INDEX HAS BEEN AMONG TOP UNDERPERFORMERS IN REGION AND HAS SHED 16% THIS YEAR

The underperforming Dubai index may offer good value, according to analysts. The Dubai Financial Market General index has been one of the top underperformers in the region and has shed 16 per cent in value so far this year. This compares with outperformance in Saudi Arabia’s Tadawul index and the Abu Dhabi index, which have gained 9 per cent and 12.49 per cent respectively.

“The Dubai market offers a good opportunity for investors to pick quality blue chip and high yield names. While macro weakness may still persist, many stocks are trading at attractive valuations,” said Nishit Lakhotia, head of Research at Sico Bank.

Yesterday, the Dubai index rose the most in the region and also in the emerging market index, closing 1.81 per cent higher at 2,825.76.

Confidence rising

“The Dubai Index’s positive performance today was mainly on account of the 6 per cent move in Emirates NBD. In our view, investors are more confident that the foreign ownership limit increase is going through. Also, the overnight hike in the Fed rate and the consequent rise in the domestic interbank rates will benefit banks,” said Vrajesh Bhandari, portfolio manager at Al Mal Capital.

Emirates NBD, which had been hit by the fall in the Turkish lira after the acquisition of Deniz Bank, closed 6.15 per cent higher at Dh9.50.

“The volumes in Emirates NBD were particularly high today suggesting some institution may be building up position. It is likely that some institutional investors have started doing bottom-up picking in the index today, including Emirates NBD,” Lakhotia said. Emirates NBD shares have shed 16 per cent since August 1.

In other stocks, Emaar Malls witnessed huge volumes along with Dubai Islamic Bank, which was the most active stock.

Bulk deals of more than 20 million shares were seen in Emaar Malls, totalling 33 million shares by the end of trade — the highest volume since June 2015. Emaar Malls closed 1.67 per cent higher at Dh1.83.

The Abu Dhabi Securities Exchange general index closed 0.36 per cent higher at 4,947.92. Buying in Etisalat, which received shareholders’ approval for 5 per cent buyback, was partially offset by selling in First Abu Dhabi Bank (FAB) and Union National Bank (UNB).

Second target

“Etisalat is headed higher towards the second target of Dh17.40 in the short term,” said Shiv Prakash, senior analyst with First Abu Dhabi Bank Securities. FAB had a buy at Dh16 for a target of Dh16.70. Etisalat closed 3.73 per cent higher at Dh16.70. FAB closed 1.38 per cent lower at Dh14.30.

Elsewhere in the Gulf, Saudi Arabia’s Tadawul index closed 0.07 per cent higher at 7,898.68, still in the vicinity of its highest level in three weeks.

The energy index closed more than 1 per cent lower, while the consumer services index closed more than 3 per cent higher.

The Muscat MSM 30 index closed half a per cent higher at 4,523.82. The Qatar exchange index closed 0.57 per cent higher at 9,784.31.

The Kuwait index closed 0.16 per cent higher at 5,138.52. The Bahrain all share index closed at 1,348.60, down 0.12 per cent.