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02 October 2023

UAE bourses may suffer corrections

By Matt Smith


Sunday's trading could determine whether the UAE markets have embarked on a new uptrend.

Both the Dubai Financial Market and Abu Dhabi Securities Market enjoyed improved volumes on Wednesday and Thursday to help them make respective gains of 2.76 and 0.5 per cent for the week. However, analysts warn both could suffer corrections unless the combined turnover remains above Dh4.5 billion. “This doesn’t necessarily mark the start of an uptrend – it’s too early to call,” said Amro Diab, EFG Hermes head of institutional sales. “It will have a decent rally in March as the first quarter results draw near.”

Dubai is sitting just above a prop of 5,880 points, while its next target is 5,900. If volumes can stay above Dh3bn then Dubai will have an excellent chance of challenging its next resistance levels at 5,920 and 5,960 points, before taking on 6,000.

“The broader outlook remains the same,” said Diab. “All Gulf markets, be it the UAE, Kuwait or Saudi Arabia, are attractively priced, with companies expected to enjoy excellent growth over the next few years.”

Dubai investors will be hoping Emaar Properties can continue its recovery. The beleaguered property developer has added 11 per cent over the past two sessions, so could be ripe for profit taking, although institutions should see any fall as an excellent opportunity to buy.

Abu Dhabi’s fortunes will once again be tied to its real estate sector. Near 100 per cent occupancy rates and a market in its infancy has seen the property stocks soar over the past 12 months. Sorouh posted a new record high of Dh10.30, so can expect to see some selling pressure, while Aldar Properties, which is 9.2 per cent below its own all-time best of Dh13.05, may struggle to make further gains because the company has reached its foreign ownership ceiling of 40 per cent.

Aabar Petroleum is another company to watch out for. If, as expected, it sells its Pearl Energy subsidiary to Mubadala, the firm will be left with lots of cash.