Now that euro-zone leaders have struck a crucial deal to contain the debt crisis, local fund managers are hoping that focus will return to the UAE markets in Abu Dhabi and Dubai as companies release quarterly figures.
"The news from Europe is not bad, and if investors are no longer scared with what is happening abroad, we might see corporate earnings back in the spotlight and some small bets in the UAE markets," said Sebastien Henin, a portfolio manager at The National Investor in Abu Dhabi. "The mood looks much better."
Abu Dhabi's benchmark, the Abu Dhabi Securities Exchange General Index, advanced 1.2 per cent to 2,471.67 last week after bank earnings exceeded expectations. The Dubai Financial Market General Index rose 1.1 per cent to 1,379.95 points. Oil prices rose by more than US$2 on Thursday after the European debt accord was announced. Brent crude for December settlement climbed as much as $2.05, or 1.9 per cent, to $110.96 in midday local trading.
European leaders on Thursday agreed on a plan to expand a bailout fund to stem the region's debt crisis. Nicolas Sarkozy, the French president, said the euro region's bailout fund would be leveraged by four to five times and investors have agreed to a voluntary write-down of 50 per cent on Greek debt.
A slew of earnings results is expected today from property, construction and technology companies that may influence trading on the local stock markets.
Last week, Abu Dhabi Commercial Bank, the country's third-largest bank by assets, reported a 91.2 per cent third-quarter rise in profit to Dh607.6 million compared with the same period last year, while Abu Dhabi Islamic Bank, the country's second-biggest Sharia-compliant lender, said net income increased to Dh319.1m from Dh314.52m in the same period. First Gulf Bank, a lender controlled by Abu Dhabi's ruling family, reported an 8 per cent increase in quarterly profit.
Sorouh Real Estate, Abu Dhabi's second-biggest developer, is expected to report today a 71.1 per cent increase in profit to Dh107.6m, according to estimates by Arqaam Capital in Dubai.
Sorouh recently provided guidance that gross profit margins in the third-quarter would be stronger than in the previous quarter, ranging between 16 and 21 per cent. The developer's shares jumped 2.1 per cent to 94 fils last week.
Arabtec Holding, Dubai's biggest builder, is expected to post a 296.6 per cent rise in profits to Dh27m.
"Supported by the collection of a liquid asset - the Nakheel sukuk received in August amounting to Dh240m, we expect the company to demonstrate balance sheet relief in the second half of the year," said Mohammed Kamal, a property analyst at Arqaam Capital. Arabtec's shares rose 1.5 per cent to Dh1.34 last week.
Qatar Telecom, also known as Qtel, is expected to report a net income of 205.6m rials, according to a consensus of analyst estimates compiled by Bloomberg. Qtel, which has a dual listing on the Abu Dhabi Securities Exchange, reported a 673m rial profit in the second quarter.
Qtel's shares slumped 5.8 per cent to Dh142.10 last week.
In Kuwait, the index slipped 0.1 per cent to 5,902.10 last week, as investors traded small-cap stocks favoured by retail investors, while institutional investors stayed on the sidelines. "It is more difficult for retail investors, in a market lacking foreign investors and few institutional investors, to move big stocks like National Bank of Kuwait, so they target small ones," said Joe Kawkabani, the chief investment officer for Franklin Templeton Investment in Dubai. "Traders like them because they think they can make some money on them."
Al Mal Investment, Hits Telecom Holding, Coast Investment and Development, National Investment and Gulf Investment House accounted for about 35 per cent of total volume on Tuesday, among a total of 200 securities listed in Kuwait.
Elsewhere in the region, Bahrain's index rose 0.4 per cent to 1,150.16 last week, Oman's MSM 30 Index advanced 0.4 per cent to 5,563.43, and Qatar's QE Index was 1.2 per cent higher at 8,535.68. The Saudi Tadawul All-Share Index rose 1.4 per cent to 6,235.64 yesterday.