Dubai & Abu Dhabi Stocks Bullish

DUBAI & ABU DHABI STOCKS ARE BULLISH:
21.04.08
•The Abu Dhabi Securities Market reached its highest close for two years yesterday, yet still could not match the gains of the Dubai bourse, which climbed 2.3 per cent.
•This rise saw the Dubai Financial Market General Index surge 127 points to 5,711, while the ADSM added 1.82 per cent to finish on 5,000 points, its best close since January 2006, according to Reuters figures.
•The markets’ steadily rising turnover over the past week had indicated that institutions were returning, although many analysts warned trading was still too low for funds to be back en-masse.
•However, any uncertainty was blown away yesterday as combined turnover topped Dh4.4 billion, by far the largest figure this month and only slightly below the November average of Dh4.7bn.
•“Foreign participation had been slowing down before last week and yesterday’s jump in turnover shows that they have now returned in a major way,” said Sherif Abdul Khalek, Al-Futtaim HC Securities dealing room manager.
•“Investors are confident we are at the start of a new uptrend and that the sideways movement of the past month could be coming to an end.
•“Volumes are increasing, which makes it more likely these optimistic forecasts will be correct, while Dubai closing above the 5,650 resistance mark was very good news.”
•Large cap companies were the drivers of Dubai’s surge, with Emaar and the DFM’s own stock increasing by 3.13 and 5.64 per cent respectively.
•The latter was also the most traded stock in value and volume terms, with 110 million shares worth a combined Dh624m changing hands. These compare to the respective market totals of 549m and Dh2.6bn.
•“The rise in the DFM’s stock reflects investors’ confidence in the whole market and a belief trading is about to really take off,” said Khalek.
•“Blue chips are leading the rally as global investors target the liquid stocks such as the DFM, Tamweel, Aldar and Sorouh.
•“Meanwhile, retail investors are bullish and day traders are returning because of the market movement and high volumes – there are some good opportunities to make money,” said Khalek.
•There were only 12 losers on both markets combined and, of these, only Gulf General Investments and Al Khazna Insurance saw significant volumes. The former fell by 0.62 per cent and the latter by 1.64 per cent.
•“Everybody has been comfortable with valuations, but were somewhat sceptical about first quarter earnings,” said Ahmad Shahin, Shuua Capital senior associate for equities strategy research.
•“With the first positive signs coming in from the United States and regional first quarter earning announcements, which have broadly matched or exceeded expectations, confidence levels among investors was noticed by the sudden surge in liquidity levels last week.”
•As forecast on these pages on Friday, mortgage lenders also excelled, with both Amlak Finance and Tamweel making near-seven per cent gains.
•According to Emaar Saudi Financial Services (ESFS), the UAE mortgage sector is ripe for massive expansion, with the country’s mortgage assets to GDP ratio standing at just six per cent, while in selected emerging and developed markets this figure between 12 and 80 per cent.
•ESFS forecasts the UAE ratio will increase to 11 per cent by 2012, which translates into bumper future profits for the nation’s mortgage providers.
•More gains predicted

The UAE markets should make further gains on Monday, providing volumes can match yesterday’s month-best figures.

“If the exchanges can sustain their momentum and more money flows into the market, then Dubai can target the next resistance of 5,850,” said Sherif Abdul Khalek, Al-Futtaim HC Securities dealing room manager.

He believes the Dubai index will reach 5,900 points, before correcting to around the 5,700-level, and offers a similar outlook for the ADSM, saying the capital’s bourse should add another one to two per cent before seeing profit taking halt its charge. This would see the ADSM reach 5,200 points before dropping back to 5,100 to 5,150.
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“The market should move up for the rest of April with lots of trading activity,” said Khalek. “If there are higher volumes tomorrow, then the markets could surprise us. Both domestic markets will move together, but if there’s correction Dubai will be harder hit than Abu Dhabi.”

Meanwhile, Deyaar shares climbed 1.7 per cent to Dh2.37 ahead of a company board meeting late yesterday. This will appoint a new chief executive to succeed Zack Shahin who resigned on Tuesday after being arrested on suspicion of embezzlement.
•Deyaar is the real estate subsidiary of Dubai Isalmic Bank.
•The ones to watch

Abu Dhabi’s heroes were once again found in the real estate and building sectors, with Aldar and Sorouh making respective gains of 3.6 and 3.34 per cent, while Arkan increased by 2.67 per cent. The latter was buoyed by rumours it will soon allow foreign ownership of its shares.

Energy stocks also prospered with Aabar, Dana Gas and Taqa all advancing as strong buy orders pushed prices higher. All Dubai sectors made gains except materials and consumer staples, which as usual saw virtually zero trading.

Unsurprisingly, brokers report international funds were targeting stock most likely to benefit from the UAE’s infrastructure boom, which means companies in banking, finance and real estate and related industries.

Du was another company on investors’ shopping lists and was Dubai’s fifth most traded share in cash terms, adding 3.03 per cent to Dh6.32. Du has jumped 12 per cent over the past week, although it has still lost a fifth of its value since December 27’s record peak of Dh7.89. First Gulf Bank and Union National Bank both leaped five per cent or more after Goldman Sachs launches coverage of both lenders with “buy” ratings.

“Interest is coming from all sides – local and international funds, retail players and high net worth individuals,” said Sherif Abdul Khalek, Al-Futtaim HC Securities dealing room manager.