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29 March 2024

UAE investor confidence intact: Shuaa

Dubai Financial Market remained in positive territory in April. (EB FILE)

Published
By Sreenivasa Rao Dasari

UAE investor confidence remained more or less intact in the face of international turmoil, according to the latest Shuaa Capital investor confidence report.

The UAE index eased just one point to 119.4 points and Kuwait recorded minor fall of 0.6 points to reach 103.9, while Qatar has seen a minuscule gain of 0.4 points, the survey said.

The GCC investor confidence turned weaker following the global turmoil that is impacting all markets across the world. Reflecting the bleak investor confidence level, the GCC Investor Sentiment Index slipped by 7.7 points in April, although remaining in positive territory at 113.1 as against the 120.8 points in March.

Saudi Arabia and Oman largely led the index lower, while the UAE, Kuwait and Qatar were flat during the period, according to Shuaa Capital's GCC Investor Sentiment Report.

Bahrain was the biggest gainer as its Investor Confidence Index rose 2.4 points to reach 106 points. The decline also came from the year's highest index level in March at 120.8 points as market players turned buoyant over Dubai World's restructuring plan and Nakheel news. This comes at a time when global markets and economies face uncertainty including the Greek sovereign debt crisis, allegations of high-level US investment bank fraud, an election in the UK and the ramifications of the Icelandic volcano eruption.

The dip in the GCC Index was largely driven by Saudi Arabia and Oman as their indices fell 7.9 and 4.6 points respectively to 128.4 and 112.1 points. Again, both indices did come from a relatively high level.

Sameer Al Ansari, CEO of Shuaa Capital, said in the report: "Given the integration of the GCC into the global economy in recent years, it comes as no surprise that the GCC is impacted by economic challenges stemming from Europe and North America, resulting in a decline in investor confidence."

As part of the report, Shuaa Capital asked investors for their views on current valuations of regional and international stocks. Investors said a range of regional and international markets are undervalued and that GCC markets were the most attractive.

The UAE bourses were more attractive among GCC bourses. The ADX led the way with an on balance figure of 56.9 per cent, up 22.4 per cent in March. Another market in positive territory in April was DFM, which for the second time running, was the month's biggest gainer as it moved from 25 per cent in March to 51.7 per cent on balance in this latest report. Nasdaq Dubai was also a positive mover in April as it gained 10 per cent to 20.7 per cent on balance.

Oliver Schutzmann, author of the Investor Sentiment Report and Chief Communications Officer of Shuaa Capital, said: "It was particularly interesting to see that survey participants view UAE stocks as so increasingly undervalued, which shows that investors have faith in the long-term fundamentals of the emirates. This comes as Western market stock valuations declined marginally according to our surveyed investors with the Dow Jones 30, Eurostoxx 50 and FTSE remaining in neutral territory. Investors were also asked where they would be putting their money over the next six months and again, the UAE came out on top. The UAE was the only destination with a positive figure in April, rising 15.3 per cent to 22.4 per cent on balance."

Bahrain was this month's biggest gainer, as its Investor Confidence Index rose by 2.4 points to reach 106 points, the highest on record since November 2009. Elsewhere across the region, all other indices remained relatively flat.

Looking at sector profitability, all apart from realty, construction, materials and heavy industries (which recorded zero per cent on balance this month), are expected to see increases in profitability over the next six months. The consumer, retail, pharmaceuticals, telecom, media and technology, transportation and logistics, and utilities sectors are expected to see significant gains in profitability with on balance figures of between 35 per cent and 40 per cent as they recorded slight increases on last month's figures. The banking and financial institutions sector also had a strong positive on balance figure for April at 22.4 per cent. Real estate, construction and materials is expected to continue to struggle.