x Abu Dhabi, UAEFriday 19 January 2018

Markets rise lifts investors' hopes

Investors are hoping for another positive week for local markets ahead of first-quarter earnings releases.

The ADX gained 2.6 per cent for the week.
The ADX gained 2.6 per cent for the week.

Have UAE stocks finally turned a corner? That is the question investors will be asking today after a strong performance by the markets last week.

"The long-overdue rally may have started in the UAE and this time it is truly catalyst-driven, if first-quarter numbers support analyst expectations," said Haissam Arabi, the chief executive of the asset management company Gulfmena Alternative Investments in Dubai.

UAE equities made decent gains last week after the local bourses announced they will adopt a new settlement system, among the last requirements by the MSCI index for it to upgrade the Emirates from its status of frontier market to emerging market.

Under the delivery-versus-payment system, expected to commence on April 28, shares will be delivered and payment received at the same time.

The Abu Dhabi Securities Exchange (ADX) General Index rose 2.6 per cent to 2,678.84 points for the week, while the Dubai Financial Market (DFM) General Index advanced 3.2 per cent to 1,622.58.

"The inclusion of the UAE in the MSCI Emerging Markets Index will be a positive outcome as it will receive attention from a larger group of international investors," said Yong Wei Lee, a senior fund manager at Emirates NBD in Dubai.

Wataniya Insurance is to launch an Dh82.5 million initial public offering (IPO) tomorrow with plans to list on the Abu Dhabi bourse.

Wataniya is the second company to pursue equity financing this year after Insurance House listed last month, ending a two-year drought of IPOs in the UAE. If Wataniya's offering is successful, it could encourage other companies to list.

"I think the environment is ready for IPOs despite regional turmoil as local liquidity is improving and is hungry for good stories," Mr Arabi said. "But having said that, IPOs need to represent really interesting companies and businesses."

About 30 companies have expressed interest in IPOs in Dubai, Essa Kazim, the chief executive of the DFM, said last week.

Investors will also be looking closely at Central Bank data expected to be released this week.

"We are looking closely on the money supply and credit growth figures for March," said Tariq Qaqish, a fund manager at Al Mal Capital in Dubai.

"February's data for the banking sector is encouraging and we would expect it to grow further in coming months," Mr Qaqish said.

Customer deposits at UAE banks increased 2.8 per cent to Dh1.1 trillion in the first two months of the year compared with the same period last year, when deposits were up 6.8 per cent on the same period of 2009, according to central bank data.

The bank's loan-to-deposit ratio eased to 97.2 per cent at the end of February from 103.6 per cent at the end of 2009.

In Saudi Arabia, the Tadawul All-Share Index rose 0.01 per cent to close at 6,604.97 points yesterday as investors positioned themselves ahead of first-quarter earnings releases. They are hoping for strong numbers this week from Saudi Basic Industries Corporation (Sabic) and other petrochemical companies.

"So far, Saudi is looking sluggish, with disappointing numbers continuing to come out from the banking sector," Mr Arabi said. "So all eyes will be on Sabic and the petrochemical sector as a whole to save the day, or we could also start seeing the rally fizzle and turn into a correction."