Market Wrap: A slow day for the markets sees local stocks rally on positive data from the banking and real estate sector, outweighing a lingering sense of concern over the prospects for the UAE's upgrade to an emerging market.
Optimism drives Emirates bourses upwards
A growing sense of optimism over the recovering state of the UAE's real estate and banking sectors helped markets rise today, though thin volumes showed a lack of conviction behind the gains - leading some to wonder whether the drought of volumes experienced last summer hadreturned already.
Stocks rose in early trading, with the Abu Dhabi Securities Exchange General Index rising 0.36 per cent to 2,604.59, while Dubai's measure rallied 0.72 per cent to 1,543.38.
Banks also rallied, with Abu Dhabi Commercial Bank rising 2.5 per cent to Dh2.79 per share on the back of reports it is seeking bidders for its 25 per cent stake in Malaysian bank RHB Capital Bhd. Meanwhile, National Bank of Fujairah hit its upwards trading limit, rising 10 per cent to Dh3.63 per share, though only 4,000 stocks traded hands.
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.
"There's been no major fundamental news," said Talal Touqan, head of research at AlRamz Securities. "What's prevailing is pure sentiment."
Trades remained sluggish as a result of worries over lingering eurozone debt issues, he said.
But the lack of trading activity unsettled some traders, who warned that the summer dry spell of low volumes could have arrived already.
"We've entered the summer early this year. Maybe it's the global warming effect," Mr Abdeen said.
The UAE's markets saw the only positive gains in the Gulf, though Saudi Arabia's Tadawul was flat.