Dubai: The first trading day of 2017 saw a resurgent interest in insurance stocks.

Stocks like Islamic Arab Insurance Company or Salama, Dar Al Takaful and Dubai Islamic and Reinsurance rose more than 14 per cent in trade on the back of expectations of additional demand for their products, after witnessing intermittent buying last week.

“Insurance stocks are rallying due to the expected positive effect of mandatory insurance law came inforce beginning of 2017,” Tariq Qaqish, head of asset management at Al Mal Capital told Gulf News.

The three stocks collectively witnessed 28 per cent of the total volumes of 562 million shares. Islamic Arab Insurance Company was the most active stock and traded about 125 million shares.

But analysts are not convinced with the insurance story.

“Although we would witness growth in premiums, we don’t believe that there would be significant bottom line impact on insurance companies. Some of the speculative investors have taken this news and drove those stocks up, which in our opinion does not make sense as the health care mostly a loss making business,” Qaqish added.

Small stocks

Gulf Finance House closed 2.46 per cent lower at Dh1.98, after gaining more than 300 per cent in 2016, the top performer on the bourse. Analysts expect the trades in smaller stocks like GFH, Shuaa will continue for more.

“It all goes back to the flows. During the last few months, flows were massively going to speculative stocks like Shuaa, Gulf Navigation, Deyaar, and Amlak. These stocks have rallied strongly not on fundamental basis, but due to speculative activity,” Qaqish said.

“This will continue until we see a shift in sentiment towards stocks which pays high dividends and traded at attractive valuations. We expect this shift to happen during the first quarter of 2017 especially after Q4 numbers are announced,” he added.

Overall, the Dubai Financial Market General index closed 0.22 per cent higher at 3,538.68.

In Abu Dhabi, the Securities exchange general index closed 0.27 per cent lower at 4,533.87.

The Tadawul index in Saudi Arabia closed up 0.21 per cent at 7,252.99.

“Saudi stocks would continue to be driven by news coming out from government initiatives to diversify their economy. Other drivers for Saudi would be implementation of the announced budget and oil prices movement,” Qaqish said. The index has gained 8.78 per cent in the past one year.

“As for Qatar stocks, we would be watching the infrastructure built up in the run up to World cup in 2022 and the M&A activities that already started in the banking space,” Qaqish said.

The Qatar exchange index closed 0.08 per cent lower at 10,428.72. “Kuwait investors would be looking at awarding of infra structure and the ongoing unresolved issues between parliament and the cabinet. Oman surprised investors in 2016 and expect to continue as we expect to see more FDIs to its economy,” Qaqish said.

The Kuwait Stock Exchange index closed 0.47 per cent higher at 5,775.35. The Muscat securities MSM 30 index closed 0.77 per cent lower at 5,700.21.