UAE stocks rally on global cues

Dubai: UAE and Gulf stocks rose on Wednesday, mirroring the rebound in some Asian shares and US shares on Tuesday after the Federal Reserve bailed out insurance giant AIG and central governments around the world pumped in billions into the financial system.

Oil increasing $3 a barrel on Wednesday also buoyed investor sentiment.

The Dubai Financial Market closed 2.29 per cent up at 4,044.99, with the market turnover expanding 17.11 per cent to Dh1.30 billion, putting an end to five straight days of losses.

Though volumes declined, the Abu Dhabi Securities Exchange posted gains for the second consecutive session, closing 1.62 per cent up at 3,831.59.

The turnover tumbled 44.70 per cent to Dh647.74 billion.

"Over the past week, the markets had taken a lot of beating and it had to bounce back and you cannot rule out the correlation between our markets and the US, at least psychologically," said Amro Diab, head of GCC institutional sales, EFG-Hermes.

"How sustainable is the rebound? It may just be one or two-day rebound. The mood is still very negative. I don't see any flows coming in, whether from local institutions or retail."

Anne Marie Browne of foreign institutional sales at Al Futtaim HC Securities, agreed. She said it is too early to say whether this is a turning point for the market. "We need to see confirmation that the market is consolidating before any rebound is sustainable," Browne said.

And, "short-term it will be very volatile - we will see a lot of extreme moves," said Fadi Al Said, head of regional equities, ING Investment Management Middle East.

Other GCC markets also ended in positive territory with the Doha Securities Market jumping 8.6 per cent, the Saudi Tadawul index increasing 3.3 per cent and Muscat advancing 4.16 per cent.

Bargain hunters, rather than retail or long-term investors, continued to dominate the markets.

Real estate, banks and investment and telecom stocks witnessed good buying on both UAE markets.

All the highly liquid stocks on DFM such as Emaar Properties, Ajman Bank, Dubai Financial Market, Arabtec and Union properties posted gains.

Emaar, the most liquid stock of the day with a turnover of Dh476.13 million, turned around to advance 1.96 per cent and close at Dh7.27.

Arabtec rose eight per cent to close at Dh12.15. Union Properties gained 6.53 per cent to Dh3.10. Emirates NBD expanded 1.14 per cent to Dh8.85. Shua'a posted a gain of 4.50 per cent to close at Dh4.18 after shedding almost 11 per cent on Tuesday.

In Abu Dhabi, Aldar Properties and Sorouh Real Estate were among the top three liquid stocks. Aldar gained 4.37 per cent to Dh7.35 and Sorouh gained 3.24 per cent to Dh5.67.

First Gulf Bank went down 0.94 per cent to Dh15.95 and Abu Dhabi Commercial Bank lost 4.97 per cent to Dh3.18. etisalat advanced 3.83 per cent to end at Dh16.

"It is not surprising to see buying on names such as Emaar, Union Properties, Aldar, Sorouh and Arabtec, which have all suffered huge losses during in the week as bargain hunters seek to take advantage," Browne said.

However, long-term investors - many of them mutual funds - are pulling out from most markets and converting into cash and evaluating what are the investment vehicle they are going to put their funds, said Vyas Jayabhanu, head of Al Dhafra Brokerage.

"They are still not sure whether the bottom has been hit. Any more surprises from the West will create panic here."

Have your say
Do you expect the volatility to continue? Is this a good time to invest? Or would you wait for the markets to stabilise? Tell us at letter2editor@gulfnews.com