Are UAE bourses playing catch-up with EM peers?

Dubai

UAE indices, which have been a laggard to their emerging markets peers, started the first week of 2018 on a strong note, and witnessed broad based buying in all sectors.

DFMGI rose 3.8 per cent in the last five sessions, and closed above the 50-day moving average of 3,460. The index closed at 3,463.57, up 0.14 per cent. Dubai Financial Market general index gained only 5 per cent last year despite strong performance in prices in oil, which determines the sentiment in the region, compared to 30 per cent gains in MSCI emerging market index.

“It was a surprise that we were ranked the lowest in terms of returns. We came in after Kuwait, Saudi [Arabia]. There was no reason for such an underperformance and a lot of people saw that and that’s why they are buying,” said Sanyalaksna Manibhandu, head of research at First Abu Dhabi Bank Securities.

Traders were positioning themselves in banks ahead of fourth quarter results.

“We are looking at stocks with high dividend yields. UAE investors need 5 per cent dividend yields, and banks provide that,” Manibhandu said.

Dubai Islamic Bank (DIB), First Abu Dhabi Bank (FAB), Abu Dhabi Commercial Bank (ADCB) and Commercial Bank International witnessed buying. Dubai Islamic Bank closed 0.64 per cent higher at Dh6.33. FAB closed at Dh10.90, up 2.35 per cent. ADCB closed 2.82 per cent higher at Dh7.30.

Union Properties closed more than 1 per cent higher at Dh1. Arabtec closed 0.82 per cent higher at Dh2.45. Islamic Arab Insurance closed 0.57 per cent higher at Dh0.53.

“Salama Insurance sees aggressive buying and extend gains towards the previous high at Dh0.588 in the near term,” said Shiv Prakash, senior analyst with First Abu Dhabi Bank Securities in a note.

Traded value rose to Dh500 million compared to Dh300 million in the previous session.

“Next week, there is room for more buying due to expectations of dividend. Real estate has been hurt by the lower amount of dividend by Emaar. Names like Aldar will see buying. So after banks, real estate will go up next week,” Manibhandu said.

Elsewhere in the Gulf, Saudi Arabia’s Tadawul index was at 7,270.13, up 0.63 per cent. Energy index was the top gainer in trade, with gains of more than 1 per cent.

The Qatar exchange index closed 0.26 per cent higher at 8,630.67. The Muscat MSM 30 index closed 0.26 per cent higher at 5,104.87. The Kuwait exchange index closed 0.83 per cent higher at 6,454.16.