With investors waiting for the declaration of 2008 results in the next few weeks before making any moves in the UAE stock markets, analysts, however, predict that first quarter results of this year would have a major impact on the long-term market trend.
They said that the market has already priced in any negative results of listed companies several months ago and the 2008 results will have only a marginal impact on the current bearish trend. However, the first quarter results of 2009 will be significant in showing how companies performed during the global financial crisis.
Mohamad Al Beheiri, trading manager at Amanah Financial services, said listed companies performed positively during the first half of 2008, while they suffered during the last quarter.
"The annual results will not be able to reflect the real impact of the crisis on listed companies because profits achieved during the first half will reduce the impact of loses during the second half," he said.
Al Beheiri felt investors and analysts would focus on the results of the first quarter of 2009 because the comparison with the results of the previous year's first quarter would be critical as it would show a strong decline in profits due to the crisis. However, it will also show which companies have weathered the crisis better and have been able to manage their operations throughout this period.
Al Beheiri also expected the results of the first quarter to create a new trend in the market, as it would give an insight to investors for their medium and long-term portfolios. "We expect market trends to change after the results of the first quarter this year, because investors would then be able to have a plan to invest. UAE markets will continue moving sideways until these results are out and then we will see strong movements up or down in different stocks, according to their performance," he said.
Al Beheiri also considered the current sideways trading as a natural process due to the strong changes in trends last year. "Sideways trading will help the markets to reduce volatility and strong fluctuations. This can create a base in to change the trend in the medium-term."
Waleed Al Khateeb, trading manager at Daman Securities, agreed results of the first quarter would be more important than the annual results of 2008.
"Investors are all waiting for news and directions in the markets and the annual results will not give the answer because the expected loses are already discounted from the stock prices. For long-term investments, all individual and institutional investors will focus on the results of the first quarter of this year."
He expected strong liquidity to enter the markets after the disclosure of the Q1 2009 results, adding this liquidity would be able to take more risks.