Investors this week will be digesting second-quarter results from Dubai Financial Market Company, the only publicly traded stock market in the Arabian Gulf.
The company posted a fall in profits of 31 per cent as trading volumes sank to summer lows. Net income reached Dh10.2 million in the quarter ending on June 30 compared with the same period last year.
Analysts polled by Reuters expected the bourse to post a quarterly profit of Dh4m, a 72 per cent decline from Dh14.71m last year.
The Dubai bourse has struggled to maintain its profitability ever since popular unrest in the Middle East that ousted leaders in Egypt and Tunisia flared briefly in Oman, Bahrain and Saudi Arabia.
Trading volumes briefly returned in the early part of this year, surging 80 per cent in the first quarter to a peak of Dh713m in February as global markets rallied.
But in the second quarter the trend reversed with activity down to an average of Dh100m daily as focus returned to Europe's worsening debt crisis.
The Dubai Financial Market General Index rallied as much as 30 per cent in the first quarter of this year but pared half of its gains by the second quarter, up 14.5 per cent year to date so far.
So far, results from the banking and financial services sector have exceeded expectations. DFMC has been the only major disappointment so far.
Last week, Abu Dhabi Commercial Bank, the country's third-biggest lender, posted a quarterly profit of Dh733.1m, exceeding analyst estimates.
But the figure was down 45 per cent year on year because of a one-off gain booked in the second quarter last year from the sale of a 25 per cent stake in Malaysia's RHB Capital.
Analysts polled by Reuters had forecast an average profit of Dh679.5m.
Abu Dhabi's First Gulf Bank reported a profit of Dh1.01 billion in the quarter, compared with Dh890.1m a year earlier. Analyst consensus had estimated an average profit of Dh950.1m.
National Bank of Abu Dhabi, the country's second-biggest bank, reported a profit of Dh1.05bn versus Dh1.03bn a year ago.
Abu Dhabi's biggest developer, Aldar Properties, is also expected to report this week. Shares of the developer behind Yas Island and Ferrari World rallied to a four-month high on Thursday as investors bet second-quarter earnings would beat estimates. Aldar jumped 3.5 per cent to Dh1.20.
The stock has eight analysts' recommendations to buy, two to hold and three to sell.
"Aldar has become the focus for nimble investors due to events in the rest of the UAE real estate sector," Julian Bruce, the director of institutional sales trading based in Dubai at EFG Hermes, told Bloomberg.
"Emaar rallied in anticipation of good numbers, which it duly delivered, and an improving set of results from Sorouh set the stage for those names to rally. As Aldar has underperformed Emaar in the past month it became an obvious target for a catch-up play."
Last week, Sorouh reported a 34 per cent increase in net income to Dh148.2m, exceeding analyst estimates.
Emaar Properties' quarterly results surged 45 per cent to Dh614m, also topping estimates.
As the third quarter gets underway, traders are noting greater foreign buying activity during Ramadan, when local trading is generally slow.
"We have seen signs of foreign buying for Emaar and this buying has filtered to other stocks in the UAE, like Aldar, Sorouh, Abu Dhabi Commercial Bank, First Gulf Bank and Drake and Scull," Mr Dalgiannakis said.
Non-Arab foreigners bought about Dh79m worth of Emaar's shares last month, bringing total current ownership to 11.98 per cent, the highest level since 2009. A year ago, holdings of Emaar by foreigners stood at 8.71 per cent.
"It could mean one of two things. Foreigners are either purchasing shares in real estate amid strategic investments, taking a longer term view on our markets, or they are buying ahead of an anticipation of a rally triggered by retail investors after Ramadan," Mr Dalgiannakis said.
"Either way, it's definitely a vote of confidence on the UAE markets."
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