The Abu Dhabi Securities Exchange hit a new 52-week high yesterday following heavy demand for energy stocks and gains in the banking sector.
This pushed the capital's bourse up 0.44 per cent to 5,148 points.
Four of Abu Dhabi's five largest stocks improved yesterday and the market would have closed higher if it was not for heavyweight etisalat, which fell 0.72 per cent. First Gulf Bank was the star among the big boys, climbing 1.51 per cent to a record close of Dh26.85 and the stock has doubled in value over the past 12 months.
EFG Hermes raised its recommendation for FGB from 'neutral' to buy' on Tuesday, but The National Investor is more cautious, offering a fair value of Dh24.70, which would mean it is 8.7 per cent overpriced, based on yesterday's closing figure.
"There is a realisation from foreign investors that high oil prices are good for the Gulf economies, while it is contributing to slower growth elsewhere," Kamran Butt, Credit Suisse head of Middle East equity research, told Bloomberg.
"While inflation concern will not go away, it is yet to impact corporate profits in the Gulf," said Butt.
In the absence of any major news, it seems speculators have moved on from cement companies are now targeting the Abu Dhabi banking sector, which provided the capital's top three gainers yesterday.
National Bank of Umm Al Qaiwain jumped a near-maximum 9.8 per cent, which means it has increased by more than a third this month. Investbank and Union National Bank climbed 5.81 and 3.69 per cent respectively.
Aabar Investments was top trader, with 87 million shares changing hands to push it up 3.5 per cent to Dh3.94, its best close for three months.
Taqa fell despite volumes of 83 million shares as investors cashed in gains from Tuesday's four per cent jump. It lost one per cent yesterday. Dana gas also saw heavy trading, as did Waha, with the former increasing by 0.48 per cent and the latter by 1.49 per cent to Dh2.73, which is a five-month high. Total ADX turnover was Dh1.75 billion. From May 1, trading on the ADX has averaged Dh1.6 billion daily, while for the DFM this figure is 23 per cent lower at Dh1.2bn.
Julian Bruce, EFG-Hermes director of institutional equity sales, said Abu Dhabi's higher concentration of small cap companies was a magnet for local speculators, who can more easily influence the prices of these stocks.
These securities are also well represented in the market weighting, Bruce said, providing support for the index.
"Abu Dhabi is treading water, but its trend seems to be more positive than Dubai's," said Bruce.
"Etisalat can't get support from foreign investors, while the two favourite stocks for non-UAE funds, Aldar and Sorouh, are at their foreign ownership limit, so there are quite a few breaks in the uptrend.
"But local investors are in no hurry to sell their positions in Aldar or Sorouh, despite this pair stalling of late, because they know there will always be demand from foreign investors and so these stocks are supporting the index too."