Stock markets are expected to trade in a narrow band with a hint of weakness for the better part of this week as traders await first-quarter results next month.
As the latest round of stock-market debacles around the world dominate financial headlines, the region’s bourses are feeling the pinch as institutional investors pull out to cover losses incurred elsewhere.
“From October last year, volumes picked up dramatically, with the market mounting a major rally. This continued into early January before hitting a correction,” said Ayman El Saheb, Darahem Financial Brokerage director of operations.
“People shouldn’t worry. The market is at a higher level than it was before the start of October, so we are in a stronger position now than we were back then. Hopefully the correction is coming to an end and we will start a new upward cycle at a better level than five months ago.”
This forecast of an imminent end to the ongoing correction may ring hollow for many readers who have heard similar predictions before, but it seems the worst may soon be over. Several factors support this. First-quarter results will be announced from mid-April and if these are as good as analysts believe they will be, then investors should end their US preoccupation and focus on the fundamental virtues of the Gulf’s booming corporations.
“International markets brought the market rally to a halt, however illogical that may be,” said an analyst who did not wish to be named. “The continued global woes have delayed the start of a new uptrend, particularly this month, but the first-quarter results should provide the catalyst the markets have been waiting for.”
He predicts both the ADSM and DFM will gain more than 25 per cent in 2008, despite the shaky start to the year. “This figure could be even higher if we have a decent pipeline of IPOs to bring extra liquidity to the market,” he added.
Another promising sign is real estate, banking and energy remain the dominant sectors on the UAE bourses, with all three industries largely insulated from a wider global slowdown.
Foreigners buy shares worth Dh1.729bn
The value of shares bought by foreign investors, or non-UAE nationals, during the week March 16-19 reached Dh1.729 billion comprising 40.1 per cent of the total value of stocks traded during the period, announced the Dubai Financial Market in a statement.
It said the value of stocks sold by foreign investors during the same period reached Dh1.947bn comprising 45.1 per cent of the total value of stocks traded during the period. Net foreign investment on the market reached Dh218.2 million during the same period, as aggregate sell.
Institutional investors bought Dh1.315bn of shares during last week.
That comprises 30.5 per cent of the total value of stocks traded during the period. The value of stocks sold by institutional investors during the period reached Dh1.690bn, which constitutes 39.2 per cent of the total value of stocks traded during the period. Net institutional investment on the market reached Dh374.6 million during the period. as aggregate sell. (Wam)
First-quarter results to boost UAE stock markets