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05 June 2023

Turnover rise hints at rally on UAE markets

By Matt Smith


Rising turnover and modest gains have left analysts optimistic of an imminent rally on the UAE markets.

Combined volumes on the two domestic exchanges topped Dh3 billion yesterday, with trading equally divided between the Dubai Financial Market (DFM) and Abu Dhabi Securities Market (ADSM).

The latter climbed 0.65 per cent to 4,735 points, while the former rose 0.38 per cent to 5,653. Dubai’s gain was a pleasant surprise, with many expecting the DFM to struggle after Emaar’s controversial dividend announcement.

“The market was still a bit flat, but overall things are looking much better,” said Sherif Abdul Khalek, Al Futtaim HC Securities dealing room manager.

“Most investors are hesitant, especially retail, as they await the end of the ongoing consolidation. Institutions are willing to buy, but have been hoping for lower prices.

“We will probably see a flat market over the coming sessions, but confidence is returning and all investors, from retail to local and foreign institutions seem bullish about the market.”

Khalek predicted the Dubai stock exchange will embark on a three- to four-month rally, with its first target 6,000 points, which would represent a 6.2 per cent increase on yesterday’s close. The next challenge will be 6,350 and Khalek believes Dubai can post a new 52-week high.

“Abu Dhabi will follow Dubai by almost the same amount,” said Khalek.

“People have been bullish since the start of the year, but global market woes have shaken confidence locally.”

Mohamed Alami, Naeem Shares and Bonds relationship manager, is more cautious and believes Abu Dhabi is likely to fare better than Dubai in the medium term because Emaar is likely to hold the latter back.

“The market didn’t go up by anything significant yesterday,” said Alami.

“It’s ready for another bull run – price levels are holding up and are backed by excellent fundamentals. Most companies are supported by huge potential in their respective industries.”

Alami, like most analysts, highlighted the real estate, banking and investment sectors as offering the most promise, together with Abu Dhabi energy stocks.

Meanwhile, Emaar’s influence on the DFM is so marked that many investors have historically used it as a de facto index to base their trading on. Alami said: “If investors do that now, they are going to miss out on some great opportunities.

“If Emaar continues to struggle around Dh11, then I don’t know how Dubai will do, because the index won’t offer a fair indication of the gains in other stocks.

“Annual meetings will be held almost every day for the next few weeks, which will generate a lot of news, both good and bad. This should spark the market,” he added.

Dubai Islamic Bank was among Dubai’s top performers, adding 3.15 per cent to Dh11.45 after Morgan Stanley gave it a fair value of Dh14. This is similar to Merrill Lynch’s price objective of Dh13.8.

“Investors are holding on to Dubai Islamic Bank shares because the lender is yet to announce when it will distribute bonus shares and dividends,” Jalal Faruki, Al Mal Capital head of institutional trading, told Dow Jones.

Air Arabia, which edged up 0.49 per cent to Dh2.04, will be one to watch after the budget carrier revealed a 272 per cent increase in annual profits.

Arab Insurance was Dubai’s best, surging 6.1 per cent, while its rival Islamic Arab Insurance added 3.15 per cent.

In value terms, Emaar was the most traded stock with Dh369m worth of shares sold, followed by the Dubai Financial Market with Dh261m. The latter put on 0.89 per cent to close on Dh5.65.
Meanwhile, Abu Dhabi’s star attractions included Fujairah Building Industries and National Marine Dredging, which both jumped more than nine per cent, while recent favourites Aldar Properties and Sorouh Real Estate added 2.25 and 3.04 per cent, respectively.