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01 December 2023

UAE Stocks Rally: 'Oversold' Emaar soars back above Dh5

By Vicky Kapur

Stock markets in the UAE and across the GCC countries opened in green on general positivity surrounding the economic situation on the back of an oil price surge over the weekend.

UAE indices – Dubai Financial Market (DFM) General Index as well as the Abu Dhabi Exchange (ADX) index – led the surge, with the ADX up 3.23 per cent at 11.15am, an hour and 15 minutes into opening, and the DFM was higher by 3.04 per cent at the same time.

Global oil prices rose to a three-week high over the weekend, surging by as much as 30 per cent from 12-year lows hit last week as speculation rose about a deal between the major oil exporters to slash production.

Other reginal indices were up too, including the Muscat Securities Market (MSM), up 2.92 per cent, the Doha market up by 1.87 per cent, and the Kuwait Stock Exchange (KSE), up 0.87 per cent at 11.15am UAE time.

Dubai bourse benchmark Emaar Properties was among the biggest early gainers, leading the market with a 5 per cent surge and back above the Dh5-level. Emaar was trading at Dh5.10, up 21 fils at 11.15am after making a high of Dh5.20 early on in the session.

In a note to its customers this morning, Bahrain-based Sico Investment Bank said “the recent sell-off in Emaar (down 27% YTD) provides the perfect excuse to be greedy.” Sico's note on Emaar is titled 'When oversold seems like an understatement'.

The investment bank has nevertheless slashed its target price for Emaar Proprties by about a fifth, from Dh10.5 to Dh8.5 even as the share is currently trading at about a 40 per cent discount to that price.

“Based on just its hospitality and retail segment earnings, Emaar is trading at FY16 P/E of 11.7x, cheaper than retail peers Emaar Malls and Mabanee. Including income from its development property business, the FY16 P/E multiple appears even more attractive at 8.1x,” Sico said in its note.

Construction major Arabtec Holdings was up 1.68 per cent to Dh1.21 per share at 11.15am, having scaled Dh1.24 early on in the session.

Brent crude oil settled at $35.99 a barrel, up almost 30 per cent from the 12-year-low that it hit last week. West Texas Intermediate (WTI), on the other hand, settled at $33.62 a barrel over the weekend, having hit a high of $34.40 during the last session of January.

The oil market rallied for four straight sessions after a renewed call from the Organisation of the Petroleum Exporting Countries (Opec) for joint efforts with rival producers to cut supply triggered a volley of comments from Russia on a deal with the cartel, something it had been refusing to do for 15 years.

Even as it is not certain if a deal will be reached among Opec and non-Opec members to curtail production and therefore end an oil glut, savvy Gulf investors are eyeing healthy valuation levels and good dividend yields to invest in the equity markets.

GCC stock markets were upbeat on Thursday too, when the DFM closed up 3.8 per cent, the ADX was up 2.16 per cent, the Saudi index jumped 3.2 per cent while the Doha market closed up 3.26 per cent for the day.