x Abu Dhabi, UAEFriday 21 July 2017

Buoyant beginning to week on UAE bourses

Markets Update: The UAE's bourses hit a snag on the way to reclassification as an emerging market, but it proves little impediment to market optimism that the local economy is improving - with video.

Markets began the week in a state of buoyancy, though confusion over the UAE's efforts towards being upgraded to emerging market status proved no impediment to a growing sense that the country's economy is improving.

Today is the deadline for the UAE's implementation of the delivery-versus-payments market model, one of the last hurdles for the country to be included in MSCI's Emerging Markets index.

However, Nasdaq Dubai posted a statement to its website on Thursday saying that the implementation of the DVP system would be postponed until after MSCI issues its decision on the status of the UAE on June 21.

"Nasdaq Dubai expects to go live with its proposed market model with some further enhancements in early July 2011, subject to regulatory approval," the bourse said in a statement.

Though the delay in implementing DvP would only affect one stock, DP World, the stock is one of the most important in the UAE and is expected to be tracked by MSCI, and markets were divided on what impact the postponement would have on the Emirates' classification.

But traders said the confusion would be unwelcome given the importance local traders are placing on an upgrade to emerging markets status.

Qatar is also seeking to be reclassified as an emerging market.

However, stocks have risen in early trading, with the Abu Dhabi Securities Exchange General Index rising 0.24 per cent to 2,604.59, while Dubai's measure rallied 0.59 per cent to 1,543.38.

Some of the early winners were Emaar Properties, which rose 1.31 per cent to D3.10 per share, and Arabtec, which rallied 3.15 per cent to Dh1.31 per share.

News that Barclays Bank had begun foreclosure auctions was contributing to a growing sense that the UAE's property bust was reaching its bottom, investors said, while positive economic data was also boosting the banking sector.

"We're seeing Eibor rates dropping and some banks are resetting mortgage rates," said Yazan Abdeen, a fund manager at ING Investment Management. "We'll see reduced cost of lending, and this will also trigger further demand."

However, volumes remained thin, with few catalysts to stir markets.

"We've entered the summer early this year. Maybe it's the global warming effect," Mr Abdeen added.