UAE banks shore up weak property shares

Dubai: Strong performance from the banking sector kept both the Dubai and Abu Dhabi market indices in the green at the close of trading on Monday, with the DFM up 1.86 per cent at 4,954.62 and the ADX up 2.49 per cent at 5,048.58.

The powerful property sector remained weak, but good performance in banking kept the markets positive. Trading value was relatively quiet in Dubai — Dh1.55 billion, compared to vDh2.2 billion last week.

“The property sector on the chart isn’t good,” said technical analyst Osama Al Ashri. “It’s a very important sector, and it hasn’t completed its correction. But the good thing is that the remaining correction isn’t very far, and the index is going up from the banking support — that means it’s not easy for the indices to break important support levels — 4,567 in Abu Dhabi and, in Dubai, 4,823.”

Arabtec, usually Dubai’s primary driver, was knocked into second place by Emaar, which saw trades worth Dh566 million drive its price up 3.73 per cent to close at exactly Dh10.

But that wasn’t enough to move it into a new uptrend. “Emaar is consolidating,” said Al Ashri. “It’s not possible to predict which way it will go; it’s in the middle — we’ll have to check closing prices at the end of this month. If it’s above Dh10.70 we can expect a new high next month; if it’s below Dh9.50 we expect a correction. The closing price is very important.”

Arabtec, however, fell again, losing 1.93 per cent to close at Dh6.10. Al Ashri, a member of Britain’s Society of Technical Analysts, said the lower price moved it out of the high-risk category, but it remained a medium-risk proposition.

In Abu Dhabi, Aldar also made small gains, closing up 0.16 per cent at Dh3.90 after trading worth Dh250 million — about 35 per cent of the total value of the Abu Dhabi market. Al Ashri said it may have difficulty rising further even if it managed to break resistance levels at Dh4.39.

“Aldar still has its uptrend, but maybe if Arabtec goes down it will lead all the property shares in both markets to go down to test their support levels,” he said. “I think if Arabtec goes below Dh5, I think Aldar will test support — it has strong support levels at Dh3.27.”

On the DFM, Dubai Islamic Bank made particularly strong gains, rising 7.46 per cent to close at Dh7.63, following trades worth Dh201 million — 13 per cent of the whole Dubai market value.

EFG Hermes predicted the UAE markets would remain unsettled in the near future. “After the May sell-off, we are more confident in adding exposure to the UAE, though markets are likely to be volatile in the short run and recovery may take some time,” the MENA investment bank noted.

But it added that foreign investment was increasing in the run-up to the long-awaited MSCI upgrade to emerging market status, which is due to come into effect next Sunday, June 1.

Abu Dhabi and Dubai saw net flows of $155 million (Dh159 million) and $44 million, respectively, during April, EFG noted. In fact, foreigners bought $484 million of MENA equities in April, up from $226 million in March. “Buying was strongest in Qatar, UAE, and Kuwait, which together saw net foreign buying of $604 million,” the bank noted.

— With inputs from Dow Jones