Dubai: The Dubai index rose on Tuesday, extending the gaining streak seen since the past three weeks, and going forward analysts are bullish on the index.
The Dubai Financial Market general index (DFMGI) rose 1.08 per cent to end at 2,911.68. The index has gained more than 9 per cent after it breached the 50-day moving average, a key bullish indicator.
It’s an investment mix shift from Saudi Arabia to the UAE which is relatively underbought. Low interest rates environment would suit the UAE.
“The rally has been driven by Emaar, and the possibility of 100 per cent ownership in banks. I see Dubai index would breach 3,000 but I’m not sure if we can break that level now. We still have more room for upside,” Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital said.
Emaar Properties closed 1.49 per cent higher at Dh5.44. Emaar has gained 31 per cent since May 20 from a low of Dh4.13. Emaar Development closed 3.66 per cent higher at Dh4.82. Dubai Islamic Bank closed at Dh5.34, up 0.95 per cent. DFM shares jumped 5 per cent to end at Dh0.95. DFM shares have surged 31 per cent since July 7.
Gulf Finance House closed 0.52 per cent higher at Dh0.960. Total traded value stood at Dh300 million, more than double of the 30-day average of Dh122 million.
Analysts feel that inflows may have come in at the cost of Saudi Arabia.
“It’s an investment mix shift from Saudi Arabia to the UAE which is relatively underbought. Low interest rates environment would suit the UAE,” said an analyst with a brokerage in Bahrain who did not wish to be named. The index may see an upside of 8-10 per cent, he added.
Saudi Tadawul index has risen 1 per cent since mid May, while the Dubai index has gained 15 per cent during that time period.
“We (the Dubai stocks) had been the cheapest among emerging markets. The international investor led with the buying. Active international investors who went to Saudi ahead of the MSCI inclusion have come to the UAE,” Yasin said.
Banks have been laggards and real estate stocks have gained favour in the rally so far.
“The change of cycle of quantitative easing would also help us, and banks in the UAE are best positioned to maintain the net interest margin,” Yasin said.