Investors in the UAE will be watching for an array of catalysts this week including earnings results for the first quarter and the successes of two initial public offerings.
"Most investors have been happy with the earnings announcements from the banking sector coming so far," said Mohammed Ali Yasin, the chief investment officer at CAPM Investment in Abu Dhabi. "The results have helped calm worries, and the details provided gave a healthy indication that the economy is moving on the right track."
Abu Dhabi Commercial Bank's first-quarter profit more than doubled compared with the same period last year, while Emirates NBD showed a 27 per cent jump in profit. Abu Dhabi Islamic Bank's profit for the quarter rose 3 per cent.
Equities took a breather last week, with the Abu Dhabi Securities Exchange General Index down 0.6 per cent to 2,695.50 points and the Dubai Financial Market General Index declining 2.9 per cent to 1,634.13.
Fund managers say markets are pulling back in preparation for the next wave of a rally, as results released last week from Emaar Properties encouraged profit-taking.
The company reported a nearly 45 per cent slump in profit for the first quarter as net income declined to Dh421 million from Dh761m in the same period last year.
"It was a week of digesting as numbers started to come out before markets were going to take a direction," said Haissam Arabi, the chief executive of Gulfmena Investments in Dubai. Abu Dhabi's index is down 0.9 per cent since January, while Dubai's main benchmark is up 0.2 per cent.
Other property and construction companies will provide a further indication of that sector's health, Mr Arabi said. Abu Dhabi's Aldar Properties as well as Drake & Scull and Arabtec - two large construction companies in Dubai - have yet to release their financial statements.
Wataniya Insurance is expected to close its IPO today, while Eshraq Properties begins its offering period this week. After an IPO drought lasting more than two years, the new listings are considered positive by investors.
"It could work and surprise us," Mr Yasin said. "The key thing with these IPOs is that they were asking for small amounts of money, which is welcome by investors."
Eshraq is the first developer to announce plans to tap the equity market in the UAE since 2007. The company plans to sell a 55 per cent stake between today and May 11 in an offering that is open only to GCC nationals.
A total of 825 million shares will be offered at Dh1 each, plus two fils for administrative costs, Eshraq said last week.
If Eshraq's IPO is successful, it could open the floodgates for other listings "because other sectors will say 'if real estate companies can raise the money, why can't we'?", Mr Yasin said.
In Saudi Arabia, petrochemicals are expected to drive the Tadawul All-Share Index this week, supported by strong earnings and high commodity prices. The index moved 0.2 per cent down to 6,710.56 yesterday.
"What we saw in the first quarter justifies the Saudi market recovering the full [distance] they had fallen during the political unrest," a trader based in Riyadh told Reuters. "Overall, the higher energy prices contributed very positively to results and set into the market immediately. That has set the tone."
Investors will also be eyeing the banking sector as King Abdullah's US$93 billion of social spending begins.
"Banks should take the lead soon. Government funds should start to feed into the bottom line," the trader said.
Elsewhere in the region, Kuwait's measure rose 1.1 per cent to 6,521.70 last week, Bahrain's inched up 0.2 per cent to 1,404.90, Oman's retreated 0.2 per cent to 6,335.49, and Qatar's advanced 0.3 per cent to 8,548.30.