Dubai: Dubai: There is an immediate turnaround in UAE stock markets in early Monday trades, with investors finding enough positives to get back into buying mode. The DFM has gained 2.20 per cent, putting on 66.79 points, while on ADX, the gains are at 0.78 per cent.
This comes after DFM dropped more than 5 per cent on a manic Sunday selling spree, while ADX’s decline was by 1.62 per cent after investors factored in the Omicron virus variant aspect.
Even before Monday’s market opening, there were indications that investors worldwide were hitting pause on their sell button – Asian stocks started flat and then inched higher, as did US and European futures. But the biggest positive for UAE and Gulf investors will be the 3.63 per cent gain in Brent contracts to $74.19 a barrel.
Early Monday, Amlak was again featuring in heavily trades, reversing some of the hits suffered on Sunday by gaining 5.19 per cent in the first 30 minutes. Emaar Development, the Emaar entity that focusses only on Dubai projects, was up 4.63 per cent.
“We expect the strongest bounce backs to be for property and banking stocks,” said Vijay Valecha, Chief Investment Officer at Century Financial. “Shuaa, Mashreq and Deyaar seem interesting at this stage. But Air Arabia will need close watching, with investors tracking how the stock might perform given the latest Omicron restrictions.
Look to oil
Real estate stocks came under pressure, and there were two that dropped to 10 per cent, the maximum possible under the ‘circuit-breaker’ rules. (These kick in when a stock’s value goes up by 15 per cent or down by 10 per cent. The stock’s trade is then stopped for a while.)
“Futures only provide an indication of what’s on investors’ mind – and quite a few seem to be thinking there’s an excessive worry about Omnicron,” said a Dubai-based analyst. “It happened when the first reports emerged about the Delta variant just before summer.
“The oil price turnaround today could be what UAE and Gulf stock investors could take their cues from – and that’s running positive.”
In for longer term
If DFM and ADX do engage in a quick turnaround, it could also be that investors are intent on picking up some stocks after they lost some of their sheen. DFM is up 19 per cent plus this year, while ADX, boosted by a series of IPOs, has gained 60 per cent.
“Long-term investors are clearly seeing the presence of value discovery in Dubai and the UAE,” said another analyst. “Especially on the back of capital market reforms and the slew of IPOs that are due to broaden the depth and scope of the marketplace in the coming months.”
Dubai plans to have IPOs of up to 10 public sector enterprises in the near-term, starting with DEWA and the toll-gate operator Salik.