Abu Dhabi: Stock rebalancing by index compiler MSCI and the start of the much-anticipated meeting by Opec (Organisation of Petroleum Exporting Countries) in Vienna weighed on UAE equities on Wednesday, spurring an increase in traded values.
In Dubai, total trade value reached Dh1.2 billion — more than twice the Dh535 million in traded value seen on Tuesday — with 63 per cent of that total going just to DXB Entertainments, Arabtec, and Dubai Financial Market (DFM) shares.
Two weeks ago, MSCI upgraded DXB Entertainments to its UAE index, and deleted DFM, while moving Arabtec down from the standard index to its small cap index. The three moves are effective at the close on Wednesday’s trade.
All three stocks dropped, with DXB Entertainments down 2.65 per cent, Arabtec down 1.52 per cent, and DFM ending 1.72 per cent lower.
“After the opening of Dubai Parks, people are still questioning whether that is going to as successful as the company (DXB Entertainments) marketed it to be. The delay in opening some of the theme parks had a negative impact on the stock, but in general, if you look at the stock year-to-date, it has performed very well; you’re talking about something like a 50 per cent increase in that period,” said Musa Haddad, equities fund manager at National Bank of Abu Dhabi.
The year-to-date increase on DXBE also contributed to some profit-taking on Wednesday, Haddad said.
As for the broader UAE bourse, the DFM index rose 0.82 per cent to reach 3,360.91 as the Abu Dhabi Securities Exchange (ADX) general index gained 1.12 per cent to reach 4,308.77. Etisalat’s share prices went up nearly 6 per cent.
Meanwhile, oil prices jumped 7 per cent as Opec started it meeting, on hopes that member countries will reach an agreement after Saudi Arabia’s energy minister said the group was close to a deal.
“The UAE [economy] is not as linked to oil prices as Saudi Arabia’s economy. In the UAE, 30 per cent of the GDP (Gross Domestic Product) is linked to oil while in Saudi Arabia, that figure is more than 70 per cent, so you’ll find a stronger move in Saudi’s equities than in the UAE’s. And you also have limited options in the UAE (equities); you don’t have a petrochemicals sector, which is what caused the jump today in Saudi,” NBAD’s Haddad said.
On Wednesday, The Saudi Tadawul index rose 1.5 per cent to reach 7,000.18, touching a high of 7,025 during trade. The petrochemicals gauge led that increase as it jumped 3.24 per cent.
In the UAE, in addition to lower liquidity compared to Saudi, it’s the real estate and banking sectors that dominate the weight of the indexes, with both sectors seeing a slowdown this year.
As for outlook, Haddad said he was bullish on UAE equities for the short- to medium-term considering valuations are reasonable.