Local investors lap up UAE stocks

Dubai: Taking cues from global markets that extended Friday's big rally on the news of a $700 billion rescue package from the US government, local investors came back into the market in large numbers on Sunday, sending the Dubai index soaring by 387 points and Abu Dhabi by 219 points.

The Dubai Financial Market General Index closed 9.87 per cent up to 4,309.90.

The trading volume and turnover surged 178.87 per cent and 186.89 per cent to 720.67 million shares and Dh2.65 billion, respectively.

Of the 31 stocks traded, 26 advanced, three declined and two remained unchanged.

The Abu Dhabi Securities Exchange Index jumped 5.97 per cent to end at 3,949.22.

Volume expanded by 120.05 per cent to 202.45 million shares with the turnover jumping 107.81 per cent to Dh927.80 million.

Of the 41 stocks traded, 34 rose, six declined and one remained flat.

After losing about Dh50 billion in market capitalisation last week, the Dubai index gained Dh14.15 billion. The Abu Dhabi index gained Dh19.46 billion.

The combined gain was Dh33.61 billion yesterday.

"The US government's decision to buy bad assets for the next two years in an effort to stabilise their economy has had a massive positive impact over here as well," said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage.

Bear markets are very sensitive. Any news can make markets turn or reverse sharply, said Shi Prakash, equity investment analyst at Mac Sharaf Securities. "The local markets also went higher on the surge seen in international markets from the last two days, making market operators to cover their short positions, if any, and buying was seen across the board," Prakash said.

The real estate sector in Dubai and Abu Dhabi, which had been underperforming throughout the summer, outperformed the market yesterday. Emaar Properties, Aldar Properties and Sorouh Real Estate traded at the higher limit.

Emaar, the day's most liquid stock with a turnover of Dh726.56 million gained 15 per cent to close at Dh8.05. It had closed at Dh7 on Thursday. Aldar rose 9.59 per cent to Dh7.77 and Sorouh climbed 9.69 per cent up to Dh6.11.

Local investors, the majority of them domestic fund companies, were the driving force behind yesterday's market move and analysts expect this to continue today, with markets opening higher.

Almost all Islamic banks closed fairly steady. There was considerable buying interest in Dubai Islamic Bank, which closed 14.86 per cent up to Dh6.26.

First Gulf Bank on Abu Dhabi went up 9.62 per cent to Dh15.95. Tamweel closed 9.97 per cent up to Dh4.19.

However, it's too early to say whether the rebound is sustainable from here on.

"This may not be sustained however, and we would expect to see a slight correction during the session as investors start booking profits on the gains made on Sunday and Monday," said Anne Marie Browne of foreign institutional sales, Al Futtaim HC Securities.

"One should be very cautious as markets are more news driven and any bad news from international markets can again bring bearishness," Prakash said.

If the positive trend continues for a couple of weeks then obviously it would have bottomed out, said Jayabhanu said.