UAE equities to stay bullish
The UAE stock markets will maintain the upward trend in near term and enters 2014 on a high note as investors are expected to pour investment in key scripts in banking, real estate and construction sectors.
The fund managers and analysts say the market is likely to further strengthen its position next year in the wake of positive economic indicators and strong recovery in real estate sector. They say equities are well positioned to capitalise the gains on sustainable basis after securing Expo 2020 bid and its formal inclusion in Morgan Stanley Capital International (MSCI) Index next year.
Omniyat Group executive chairman and chief executive Mahdi Amjad said that a combination of factors — Dubai Expo 2020 and recent mortgage regulations — would trigger higher growth for the real estate industry in Dubai next year.
Shailesh Dash, chief executive of Al Masah Capital Management, said outlook for the UAE stock markets is strong, but it needs fresh catalysts like developing of an IPO market to sustain the upward trend for a longer term.
“Given the rally seen in 2013, our outlook on the stock markets is similar to our general outlook which is that 2014 will be a further validation of the recovery cycle and a consolidation of the gains seen this year,” Dash told Khaleej Times.
The Dubai Financial Market’s General Index surged 4.79 per cent last week while trading volumes surged to 639.86 million shares on the weekend. The Abu Dhabi market also recorded 1.55 per cent growth with a steady rise in trading volumes.
Emaar Properties led the rally in real estate sector with 13.05 per cent increase in its share value to Dh7.36. Deyaar shares climbed 9.58 per cent while Arabtec and Union Properties stocks rose 4.18 per cent and 2.85 per cent, respectively.
In banking sector, Dubai Islamic Bank and Emirates NBD advanced four per cent and 1.63 per cent, respectively.
Saleem Khokhar, head of equities at National Bank of Abu Dhabi’s Asset Management Group, said last week that real estate and banks are likely to continue to attract investor attention in coming days.
Dash said the regional markets should look forward to the MSCI inclusion of Qatar and UAE, as this event will provide support and a psychological base throughout the year. However, he said the proposed tapering of the Federal Reserve’s asset purchase programme may have a negative affect on emerging markets.
“We believe the tapering off when it starts in USA will have a negative affect on most of the emerging markets, thereby sentiments for the GCC markets as well. But, we strongly believe the fundamentals of the GCC stock markets is very strong and any such decline should provide a great opportunity to increase stakes in the local markets,” he said.
To a question, he said Dubai’s rally would need fresh triggers, as it’s a thin market with only 10 stocks providing the bulk of the gains.
“The UAE in general needs the IPO market to really pick up and they need the new IPO’s to happen here and not be transplanted to London. We feel very strongly that a strong extension of the 2013 rally will be based on a strong local IPO pipeline,” he said.
In reply to a question, he said integration of UAE markets will be a step in right direction and will boost the investor sentiments in the region.
“We are heading in the right direction and similar to the MSCI saga, we think eventually all the boxes will be ticked and the powers to be will give the final blessing. Whenever it happens in 2014, it will be viewed very favourable and become a key catalyst alongside the MSCI inclusion. But like the MSCI process, we have seen many stops and starts so we temper our expectations and hope to be pleasantly surprised if it does happen soon,” Dash concluded.