Dubai: UAE stock markets contained their losses on Tuesday, closing relatively flat after a sell-off yesterday over weak global sentiments following the escalating Israel-Palestine conflict.
The Dubai Financial Market closed down 0.12 per cent, relatively recovering after its biggest single-day drop of 2.6 per cent in 2023 yesterday. The Abu Dhabi bourse closed lower by 0.17 per cent.
Earlier, both markets opened positive with investors rushing to buy the dip. The DFM was up 0.23 per cent around the two hour mark of trading, while ADX had gained 0.16 per cent.
Market watchers say investors – retail and institutional – are engaging in some ‘buying the dip’. “Al Ansari Financial Services (down 0.86 per cent) and ADNOC Distribution (up 0.85 per cent) had interesting prices to pick up more,” said one investor.
That sentiment – stretching across other stocks and across categories – was the prevailing one as the trades got underway. Emaar Properties and Union Properties are early gainers, while on ADX, IHC and Alpha Dhabi are winning it back.
Plus, two ADNOC entities - its Logistics & Services arm and the drilling entity - both made their interim dividend announcements, of Dh239 million for Q2-23 and Dh1.3 billion for H1-23, respectively. (For ADNOC Drilling, the last day for eligibility is October 17, while the record date for ADNOC L&S is October 19. On the dividend yield side, both have delivered above market average returns to shareholders. )
The UAE stocks' upbeat start mirrors what's been happening with most of the major Asian markets, and overnight in the US. Europe too could catch the same sentiments when the markets open, but for now, investors seem to be taking a breather to take stock of the geopolitical situation.
On Tuesday, Dubai also got the PMI (Purchasing MAnagers Index) boost, with September's score reading 56.1 and well into the growth trajectory. So, while the Israel-Hamas crisis plays out, there's enough happening in GCC economies to set themselves up for the longer haul.
With the GCC/UAE indices perched solidly in 50+ economic expansion territory since December 2020, we believe this latest Dubai PMI data point again underscores the sovereign allure of this region. Particularly at a time of broader global economic fragility and uncertainty.
The Dubai PMI score for last month also bucks the 'current trend seen across many other (G10) geographies where the PMIs are languishing in sub-50, economic contraction territory', Ballard added.
If not stocks...
Investors wanting to de-risk portfolios still have plenty to choose from. Many funds and institutional buyers are getting into gold all over again, which rapidly ended the slide of the previous two weeks. Gold is averaging $1,857 an ounce.
And if investors want to further cut down on stress elements, Dr. Karim El Solh, co-founder and CEO of Gulf Capital, “We are focused primarily on private markets such as private equity, mezzanine and real estate. These alternative asset classes are, in their nature, private long-term investments that are not subject to extreme volatilities seen today in the bond and public equities markets.”
Global investors are increasing their allocations to alternative asset classes to boost their returns, reduce their portfolio volatility and increase diversification.