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21 April 2024

Abu Dhabi market to be more buoyant than DFM

By Matt Smith



The Abu Dhabi bourse is expected to outperform its Dubai rival this week, thanks to better valuations and an ongoing hunger for the capital’s real estate stocks.

The Dubai Financial Market fell 2.14 per cent last week, while the Abu Dhabi Securities Market added a modest 0.78 per cent over the same period.


More of the same is expected this week, with investors unwilling to pump cash into the market.

“Trading is unlikely to pick up immediately, but once the annual meetings get under way we should see things improve,” said Krishna Murthy, chief executive officer of Al Rostamani financial services division.


Dubai’s fortunes will be tied to Emaar, with the pair stringly correlated at the moment. If Emaar can find the momentum to close above Dh12.75, the DFM could break 6,000 points, analysts say. But the property developer would require volumes of more than 50 million shares for this to happen.


“Abu Dhabi looks a better bet than Dubai right now,” said Ganesh Mani, a Waves Investments analyst. This view is based on technical and fundamental analysis, with the capital’s bourse scoring higher on the related strength index, which compares markets in the Gulf.


Lower valuations are one part of this, while Abu Dhabi’s greater diversification of stocks is also a factor. The ADSM is less prone to the whims of speculators and day traders, so investors looking for long-term security are increasingly turning to the capital.


Unsurprisingly, Aldar Properties and Sorouh Real Estate appear on most investors’ shopping lists, with the nascent Abu Dhabi real estate market appearing to offer massive returns. However, some analysts warn Aldar and Sorouh are new companies and so have little track record of delivering projects, which means they may be a riskier investment than some investors think.


Sorouh will open today at a record price of Dh11, having surged 7.8 per cent last week. Aldar has been more subdued of late, trading at 15 per cent below its all time best of Dh13.05, which was achieved in late December.


The firm has reached its foreign ownership limit of 40 per cent, which has limited its rise, but with Goldman Sachs issuing a report on Thursday announcing a target price of Dh15.70 for Aldar, foreign institutions may be more prepared to pay a premium for this stock.


Foreigners net sellers on DFM


Non-Arab investors were the only net sellers on Dubai’s stock market in the first week of March, when the benchmark fell more than two per cent, bourse data showed.

Investors from outside the Arab region sold Dh1.24 billion ($337.7 million) worth of stock and bought Dh781.72m in the trading week to March 6, Dubai Financial Market said. Data showed non-Arab investors were the only net sellers in the trading week, during which the index shed 2.1 per cent.
UAE nationals, nationals of other Gulf countries and other Arabs were all net buyers during the week, the bourse said. 
DFM, the only publicly traded Arab bourse, derives its income from trading volumes. It beat forecasts with its fourth-quarter net profit as trading income surged during a stock market rally in the three-month period. (Reuters)