Dubai This summer, the MSCI review of the UAE markets — for their possible inclusion in emerging market indexes — could be used to make some money. While there is no guarantee that the UAE will get emerging market status, the volatility caused by speculation could be utilised by short-term traders.
"Last year we witnessed an almost 6 per cent rise in the week before the MSCI decision in June. This year, we expect about the same," Sa'ad Al Chalabi, technical analyst of Al Ramz Securities, says.
The possible upgrade of the UAE from frontier to emerging will have a positive effect on market liquidity. Tareq Qaqish, deputy head of asset management at Al Mal Capital, believes speculators will also see this news to create short-term opportunities.
But Marwan Shurrab, vice-president and chief trader at Gulfmena Investments, says: "At the end of the day this is speculation that we [cannot] actually position the portfolio on, unless the expectations are extremely strong in your favour." News on MSCI possible upgrade will certainly attract more investment to large capitalisation, liquid stocks. And in that regard Qaqish recommends Emaar, Dubai Financial Market, Arabtec, First Gulf Bank, DP World and possibly National Bank of Abu Dhabi to be the main beneficiaries.
Saleem Khokhar, head of equities at National Bank of Abu Dhabi's asset management group, however, thinks little appears to have changed from the position in December and the status quo will likely be maintained.
Company reports
More important than the MSCI review, Shurrab says, is the second-quarter company reports. "Speculation is going to be on second-quarter numbers outperforming first-quarter. If that comes, that is something beneficial for the market as a whole," Shurrab adds.
Al Chalabi sees "the slow months of July and August as excellent [buying] entry points for the year; early July specifically because of the Ramadan effect."
