UAE indices in tug of war between weak oil and select stocks
Published: 18:22 February 2, 2016
Dubai: UAE indices ended a tad lower Tuesday as pressure from falling oil prices was offset by buying in select counters.
The Abu Dhabi Securities Exchange General Index closed 0.43 per cent lower at 4,088.64 after trading in the range of 4,075.81 to 4,147.32.
The Dubai Financial Market General Index closed 0.32 per cent lower at 2,970.36.
“[The] market is being inflated mainly by small caps. Retail speculators are lifting names like Eshraq, Manazel, Amlak, Gulf Finance House and if we take a look at the blue chips, they [were] mostly in the red on Tuesday,” said Hesham Khairy, head of Institutional Trading at Menacorp.
Amlak Finance ended 0.79 per cent higher at Dh1.27, while Gulf Finance House ended 0.54 per cent lower at Dh0.553.
Among the blue chip counters, Emaar Properties closed 0.77 per cent lower at Dh5.14 while Dubai Islamic Bank (DIB) closed 1.84 per cent lower at Dh5.87.
Arabtec ended the day’s trading 2.54 per cent lower at Dh1.15 while Dubai Investments was unchanged at Dh1.72.
Out of a total of 33 stocks traded on the exchange, the shares of 11 firms rose, while those of 19 firms fell.
In Abu Dhabi, Eshraq Properties closed more than 11 per cent higher at Dh0.60 while Dana Gas ended more than 2 per cent higher at Dh0.44.
Aldar Properties closed at Dh2.28, down 0.44 per cent.
Methaq Takaful Insurance ended 3.92 per cent higher at Dh0.53.
Out of a total of 26 stocks traded on the exchange, the shares of 11 companies rose, while those of nine others fell.
Meanwhile, oil has fallen more than 10 per cent since Monday, keeping investors on edge, but that has not refrained them from continuing to buy select counters.
“Oil could have more gains before its continues its downtrend or at least test recent lows. Global markets have around 3 per cent room to go higher and would expect a pause and a reversal. Our market around these levels is short and [we] already see some GCC and foreign institutions selling the rally,” Khairy said.
He had a word of caution for the retail traders.
“Retail speculators will be hurt again by this foolish buying in the next leg. [The] problem with our market is that all sectors go down together but with the next sell off, [we] would definitely pick up banks specially Emirates [NBD], Dubai Islamic Bank and First Gulf Bank. [The] rest of the sectors haven’t reported yet, so would wait to see how real estate is performing before calling any buys on that sector,” Khairy added.
Qatar bucks trend
In other markets, the Qatar Exchange index closed at 9,547.32, up 0.90 per cent, bucking the negative trend in the Gulf.
“[The] Qatar index may target 9,855 later in the week, but may go down after that to [a] support level [of] 9,218,” Osama Al Ashri, a member of British organisation, the Society of Technical Analysts, said.
The Kuwait Stock Exchange index ended 0.50 per cent higher at 5,132.86. The index may hit a new high of 5,227 later in the week, Al Ashri said.
The Bahrain Bourse All Share Index closed 0.51 per cent higher at 1,189.66. The index has an up target of 1,219, added Al Ashri.
The Muscat Securities MSM 30 Index closed 0.39 per cent lower at 5,192.
Elsewhere in the region, the Egyptian EGX 30 Price Index closed 1.73 per cent higher at 6,008.85. The index could hit resistance level of 6,155 next week and could even go up further to 6,288, Al Ashri said.
“I see a temporary recovery in the Egyptian index, but it may go down again,” he said.
Saudi banking, cement sectors shine
In Saudi Arabia, the banking and cement sectors have been the best performers on the index, according to Hesham Khairy, head of Institutional Trading at Menacorp.
“For banks, [we] prefer Riyad, SABB and SAMBA, which have attractive dividend yields, consistent earnings payouts and a positive outlook on higher interest rates,” Khairy said.
In the cement sector, Khairy said Yanbu, City and Arabian Cement each have a locational advantage as they are close to where demand is high and possess strong balance sheets.
According to him, multiples are looking attractive as well.
Saudi Arabia’s Tadawul All-Share Index (Tasi) closed 1.87 per cent lower at 5,874.02.