Oil limits downside on UAE stocks, but outlook still weak
Published: 18:49 February 3, 2016
Dubai: The downside in UAE equities was limited on Wednesday on buying in selected stocks, but analysts say the outlook is still weak for local markets.
The Dubai Financial Market General Index closed 0.17 per cent higher at 2,975.55, after moving in the range of 2,928.70-2,979.38.
“Local markets were sold off, and oil prices also were holding off and even the speculators are very active, which has limited the downside,” Mohammad Shabbir, head of equity funds and portfolios at Rasmala said.
Dubai Investment closed more than a per cent higher at Dh1.74, while Emaar Malls ended 4.13 per cent higher at Dh2.52. Du ended more than 3 per cent higher at Dh5.85. Amlak Finance ended steady Dh1.27.
Arabtec ended 0.87 per cent higher at Dh1.16. “While medium term traders remain neutral, the dip below the Dh1 level has indicated weakness in the share, opening the way for a further decline,” MENACORP said in a statement.
Among the losers, Emaar Properties closed 0.97 per cent lower at Dh5.09. “Given bearish characteristics, long term traders should remain neutral in Emaar Properties with the aim to reposition only after stronger trending characteristics appear on long term charts,” MENACORP report said.
Out of a total of 34 stocks traded on the exchange, shares of 16 firms rose, while other 10 firms fell. The rest remained steady.
The Abu Dhabi Securities Exchange general index closed 0.83 per cent lower at 4,054.59. “Long and medium term traders should remain outside of the Abu Dhabi market while bearish scenarios continue to develop. In the medium term the market remains strongly bearish,” said the MENACORP report.
Dana Gas ended 3 per cent lower at Dh0.43, while Aldar Properties closed half a per cent higher at Dh2.29. Abu Dhabi Commercial Bank ended 1.11 per cent lower at Dh6.25.
Eshraq Properties closed 5 per cent lower at Dh0.57. Out of a total of 30 stocks traded on the exchange, shares of 7 firms rose, while 15 others declined, the rest remained steady.
“I don’t know till when these levels would be sustainable. The outlook is still very soft. I think the pressure may come looking at the weak PMI numbers,” said Shabbir. The Emirates NBD UAE Purchasing Managers’ Index (PMI) showed a loss in growth momentum in January, slipping to 46-month low, showing weakness in the non-oil economy.
The Dubai index has shed more than a fifth of its value in the past year as investors liquidated long positions as falling oil prices dented sentiment.
However, some banks like the First Gulf Bank and ADCB may see some upside on strong results.
“Banks have shown a mixed picture, some of the big banks have come with better numbers, so we may see some more upside,” Shabbir said.
For example, Emirates NBD, the largest bank in the UAE by total income, net profit and branch network reported a net profit of Dh7.1 billion for the full year 2015, up 39 per cent.
Elsewhere in the Gulf, Qatar Exchange index closed 1.52 per cent lower at 9,486.71, while Muscat MSM 30 index closed 0.51 per cent lower at 5,165.51.
Kuwait Stock Exchange index closed 0.27 per cent lower at 5,118.84. Bahrain bourse all share index closed 0.69 per cent lower at 1,181.47.
Saudi’s Tadawul index reversed early losses to end higher on buying in select names, and the index may fall to 5,200 levels by early next week, Rasmala’s Shabbir said.
Brent crude, which bounced above $33 (Dh121) per barrel mark, also helped sentiment. The Tadawul index closed 0.91 per cent higher at 5,927.36. Petrochemical blue-chip Saudi Basic Industries fell as much as 1.5 per cent early on, but closed 1.9 per cent higher. Saudi Kayan surged 5.2 per cent.