UAE markets rally on first day

Dubai: UAE markets rallied strongly on the first trading day of the new year yesterday with domestic retail investors returning in substantial numbers amid recent encouraging gains in global markets and some recovery in oil prices.

"At year-end, margins needed to be closed and the retail investors got out of stocks, but now at the start of the year, they are reentering and reinitiating their positions," said Mohammad Galal, head of foreign institutional sales and sales trading at Al Futtaim HC Securities. "That's what drove the markets higher today."

In Dubai, volumes surged almost 189 per cent to 454.56 million shares valued at Dh641.02 million. The benchmark closed 7.76 per cent higher at 1763.20, boosted by a surge in both real estate and finance and investment stocks, among the worst performers last year.

The Abu Dhabi Securities Exchange Index jumped 5.64 per cent to end at 2524.76, up 134.75 points. Real estate, energy, telecom and banks led the gains.

With the UAE exchanges closed last Friday, when the European and US markets started the year strongly, yesterday's rally was seen as a case of catch-up.

"Markets all across the globe recently have performed relatively well and the UAE markets have been closed longer than the rest. So it had a bit of catching up to do," said Julian Bruce, head of foreign institutional sales at investment bank EFG-Hermes Holding.

"Also, there is a sentiment within the market that there may be some recovery, bringing in retail buyers into the market today."

The encouraging signs came also from some recovery in oil prices, trading at around $47 during the day when the markets were open.

Among the gainers on DFM were Emaar Properties, soaring 14.60 per cent to close at Dh2.59, Air Arabia, advancing 14.61 per cent to Dh1.02, Shuaa Capital hitting the limit at 15 per cent to end at Dh1.15, Deyaar Development surging 14 per cent to Dh0.57 and Dubai Investments Company, closing 14.85 per cent higher at Dh1.16.

On ADX, Aldar Properties, Dana Gas, National Bank of Abu Dhabi, Abu Dhabi Commercial Bank and etisalat advanced 9.92 per cent, 8.47 per cent, 9.93 per cent, 9.55 per cent and 9.77 per cent respectively.

To analysts, the surge in real estate and finance and investment stocks were not surprising as all the possible ugly scenarios have already been priced in.

"It cannot get any worse," Galal said. "We expect Q4 results to be in line with expectations. There won't be any shocking news."

Bruce agreed, adding, "There is always a certain perception that in any case of an upturn or recovery, whichever terminology you wish to use, those sectors which have been sold off the most or perhaps oversold, is always perceived to be the ones [such as these two sectors] which are likely to recover most quickly.''