Dubai: First Abu Dhabi Bank expects the UAE equity markets to rally in 2019, boosted by a weaker dollar, higher oil prices and Abu Dhabi’s economic stimulus plan.
The Dubai Financial Market general index has been on a downward spiral since 2014, when it touched a record high of more than 5,000. The index has shed more than 50 per cent of its value, but a recovery may soon be in the offing.
“We predict a banner year for the UAE, A less hawkish Fed, a weakening dollar, and Expo2020 — all of these factors suggest a bullish Dubai. The emirate will also benefit from the Dh50 billion stimulus package set to be rolled out by Abu Dhabi this year. Valuations, fundamentals and mean reversion — all are set to favour the UAE this year,” Alain Marckus, Managing Director and Head of Investment Strategy and Investment Management for Global Asset Management at FAB said.
The Dubai Financial Market general index shed more than 25 per cent in the past one year, making it the most oversold in the region. This may have resulted in attractive valuations, but buyers are wary to get in the stocks because of low confidence level.
“The major shift in this year’s outlook is that we are less constructive on the US dollar and expect the currency to weaken. As a result, we are anticipating good returns from emerging markets in 2019, including the Middle East, as they benefit from a weaker dollar,” Marckus said.
The price of oil, which fell nearly 20 per cent last year and averaged $72 a barrel, is likely to recover to that higher range in 2019, as the US dollar gives up some of its gains.
FAB is bullish on US stocks, which are expected to be buoyed by the country’s continued stronger economic growth. President Trumps pro-economic policies along with trade realignment will continue.