UAE stocks lose ground but downside limited

Investors to keep a close eye on fourth-quarter results next week in search for leads

Published: 19:51 January 21, 2016

Siddesh Suresh Mayenkar, Staff Reporter

Dubai: UAE stocks ended in negative territory on Thursday on the back of weak oil prices but the downside was limited given the bounce-back on its global peers.

The Abu Dhabi Securities Exchange General Index ended 0.81 per cent at 3,736.95, after trading in the range of 3,731.56-3,783.81.

The negative news came in from Brent crude, which hit its lowest level since 2003, while the downside was restricted due to a bounce-back in equities elsewhere.

In stock-specific movements, Dana Gas ended more than 5 per cent higher at Dh0.40, while Aldar Properties closed half a per cent lower at Dh1.95.

RAK Properties ended more than 2 per cent higher at Dh0.44.

Aldar Properties ended half a per cent lower at Dh1.95.

“In Aldar, the long-term trend is strongly bearish at the time being, as marked by the fall below many daily strong support zones. Long-term bullish scenarios have been postponed for now and traders should be waiting for fatigue in this descent before considering new positions in this share,” Menacorp said in a note.

Out of a total 25 firms traded on the exchange, the shares of 15 firms declined, while those of seven rose.

In Dubai, the DFM General Index also ended down 0.64 per cent lower at 2,621.96. Emaar Properties closed 0.91 per cent lower at Dh4.36.

Remaining neutral

“Long-term traders should remain neutral on Emaar Properties, with the aim to reposition only after stronger trending characteristics appear on long-term charts.

The break below previous medium-term support at Dh5.70 has shown further weakness in the share and points towards a downwards continuation,” the Menacorp note added.

Air Arabia ended 3 per cent lower at Dh1.13 while Gulf Finance House closed trade nearly half a per cent lower at Dh0.470.

Investors are expected to continue watching overseas markets more closely for leads, in addition to keeping an eye out for the fourth-quarter results.

“How our markets are would depend on how markets behave overseas as the co-relation is closer,” Sanyalaksna Manibhandu, Manager of Research, National Bank of Abu Dhabi Securities told Gulf News. “And the overseas market would closely watch China and crude for leads.”

“Going into next week, I would [urge investors to] wait for the results to come through and then decide,” Manibhandu said.

Manibhandu said “next week, we would be talking about results again, with banks like UNB [releasing their results], so markets would have more to price in.”

He added that “going [forward], the focus would increasingly be internal,” with investors benefiting from dividend yields, which could “surprise” the street.

Sebastien Henin, head of asset management at The National Investor, said “companies in the UAE have been resilient in the past quarters, but it would be interesting to see if any companies are still resilient a year after the fall in oil prices,”

Elsewhere in the Gulf, Saudi Arabia’s Tadawul All Share Index (Tasi) recovered to end steady. The index closed 0,07 per cent higher at 5,463.60.

However, some Saudi companies came under pressure in the thick of the earnings season, with the Savola Group plunging more than 6.5 per cent despite reporting an 18.6 per cent rise in fourth-quarter net profit. Saudi Telecom Co traded recovered after falling more than 2 per cent. It reported a 20.2 per cent fall in fourth-quarter profit.

In the wider Middle East, the Egyptian index fell more than 1 per cent at 5,713.35.

Fact box: Global volatility must subside for markets to recover

The massive volatility that has engulfed global markets needs to subside for local markets to cool down, Sebastien Henin, head of asset management at The National Investor, said.

“We need volatility to go down across overseas markets for our UAE markets to stabilise a bit,” Henin said.

Elsewhere in the Gulf, the Qatar Exchange index closed 1.21 per cent lower at 8,584.01, while the Muscat Securities MSM 30 index closed 0.48 per cent lower at 4,867. The Kuwait Exchange index closed 0.78 per cent lower at 4,946.33.

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