x Abu Dhabi, UAEWednesday 17 January 2018

UAE stock exchanges among world's top performers

The UAE's stock markets are among the world's best performing this year, as banks resume lending, property deals sell out, and seasoned institutional investors scour the Emirates for bargains.

Abu Dhabi Stock Exchange. Christopher Pike / The National
Abu Dhabi Stock Exchange. Christopher Pike / The National

Stock markets in Dubai and Abu Dhabi are battling it out among the top three best-performing globally so far this year, as global investors descend upon the emirates.

With new property developments selling out fast and tills ringing across the UAE's malls, both bourses have extended their longest winning streaks in several years.

The Dubai Financial Market General Index is up 40.9 per cent year-to-date, followed by the Abu Dhabi Securities Exchange General Index with a gain of 33.5 per cent. That made them the best-performing markets worldwide this year in US dollar terms yesterday afternoon, *alongside volatile indexes in Ghana and Kenya which have jockeyed in the past few days for the top spot.

The rally was overdue and was allowing markets to catch up with the strong economic performance of the Emirates since the easing of the financial crisis, said Fathi Ben Grira, the chief executive of Menacorp, the Abu Dhabi-based brokerage.

"When you looked at the fundamentals of the country as a whole, the weakest point was the local stock markets," he said.

Liquidity has surged on the back of unprecedented levels of stimulus from global central banks, most recently the Bank of Japan, which is encouraging greater investment in riskier frontier markets.

Confidence has been driven by a splurge of new spending from government, including the world's biggest mall development, new road and rail projects, and even supercars for Dubai's police force.

A surge in the value of Emaar Properties has accounted for almost a quarter of the gains on the DFM, as Dubai's Government breathes life into projects which have languished since the financial crisis. The Abu Dhabi Government has also resumed many projects, spurring the capital's lenders.

Bank lending has recovered from a torpor experienced last year, with sector-wide loans up 2.4 per cent to Dh1.12 trillion during the first quarter of the year - not far from the rate of growth witnessed during all of last year - according to the Central Bank.

"The economy is expected to grow 3.1 per cent in 2013, led by non-oil sectors that would continue to see massive infrastructure spending, primarily in Abu Dhabi and Dubai," analysts from Global Investment House wrote in a research report.

Damac Properties said yesterday it had sold out the first two tranches of apartments in a development co-branded with Paramount Pictures, with sales exceeding Dh1 billion. A third tranche is to go on sale this week as part of a roadshow encompassing Saudi Arabia, Qatar and Singapore.

Stocks on the ADX have advanced during each of the past 10 days, the longest winning streak since last August, putting the index at the highest level since 2008.

Meanwhile the DFM General Index has surpassed the highs reached at the time when crisis engulfed Dubai World in 2009, as the emirate's debt troubles retreat.

Dubai Group, which is attempting one of the few ongoing debt restructurings from that time, said it had reached an agreement with several of its creditors this week.

Institutional investors are arriving in greater numbers and are giving hope to traders that an upgrade from MSCI could be on the cards.

The index provider is due to release its review of its indexes on June 12, with the UAE and Qatar poised for their sixth tilt at inclusion in the "emerging markets" index since 2009.

"So far most of the investors are active investors in the local markets and UAE nationals, but we started to have foreign institutions back into the country," Mr Ben Grira said. "We've seen new account openings and new people coming into the country."