UAE markets stage rally after strong realty and finance results

Abu Dhabi: UAE markets experienced a moderate rally yesterday, spurred by the excellent results disclosed by real estate companies and banking institutions so far.

In Dubai, the benchmark index advanced by 1.74 per cent to 4,232.72, with Emaar Properties accounting for about 45 per cent of the value of traded shares.

Emaar gained 2 per cent to close at Dh12.75, as investors were encouraged by the excellent results disclosed by Union Properties, which indicates a healthy growth for the real estate sector.

"Emaar is observed as an indicator for the condition of the property market, as its results reflect the realities of that market which is one of the most, if not the most, important drivers for the economy," Rami Sidani, a senior associate partner at Shuaa Asset Management told Gulf News.

The UAE markets are beginning at last to show signs of recovery, and a degree of response to the listed companies' performance.

"With speculators out of the way, the margins within which the markets fluctuate are becoming more healthy, where less volatility and sharp losses forced speculation to a corner," commented Hamood Abdullah, general manager of Emirates International Securities.

In Abu Dhabi, the general index managed to recover above the 3,000 mark, as it gained 1.44 per cent to close at 3,026.53.

A strong rally in both the banking and telecommunication sectors is the main drive for the bullishness, as indicators shifted investors' sentiments regarding the results of the National Bank of Abu Dhabi, and etisalat.

Abu Dhabi Islamic Bank, which disclosed 38 per cent growth in 2006 profits after the trading session, was the focus of trading and accounted for Dh87.5 million out of the total value of traded shares which amounted to Dhs311 million.

According to many analysts, UAE stocks in general are poised for a healthy growth, and diminishing volatility.

"However, the announced Initial Public Offerings (IPOs) are expected to negatively affect market liquidity and subsequently prices," added Abdullah, referring to the recent announcement of floating Sharjah's Air Arabia at the Dubai Financial Market.

"IPOs drain the market of liquidity for two reasons; first some investors tend to liquidate their positions to subscribe in the new offering, while others dispose of their holdings of fear that prices will be negatively affected by liquidations," he added, explaining that even-though big investors' subscriptions are only in the banks' books, yet small investors provide for substantial amounts of cash that flow out of the market.