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Stocks Rebound on Bargain-hunting

The benchmark index of the Dubai Financial Market which slumped to a seven-week low on Monday, ended 2.3 per cent higher at 1,814.88 points, while the main index of the Abu Dhabi Securities Exchange added 0.8 per cent at 2,803.91 points.

Dubai index heavyweight Emaar Properties led gainers in the property sector, rising by 4.5 per cent to Dh3.05. Arabtec Holding was up by 4.3 per cent to Dh2.70.

Union Properties bucked the trend, falling for a third straight session to lose 4.3 per cent to Dh0.90, extending its losses this week to 22.4 per cent as investors continued to worry about the company’s financial health after posting a second quarter loss.

Stocks markets worldwide bounced back from Monday’s sell-off on concerns that the global economy would take longer to recover after a gloomy consumer outlook report in the US. American consumers account for 70 per cent of the US economy and 20 per cent of the global economy.

Some of those concerns were eased yesterday, with most Asian markets rebounding, while Europe had a strong start after another batch of better than expected economic data out of Germany, Europe’s biggest economy.

The ZEW research institute’s main confidence index spiked up to 56.1 in August, way ahead of July’s 39.5 and analysts’ expectations for a more modest increase to 45.

“Monday’s pullback in Dubai was exaggerated and this was seen as a good buying opportunity for investors to snap up cheaper stocks,” said Haissam Arabi, CEO and fund manager at Gulfmena Alternative Investments.

Volumes in both UAE bourses remained light as investors remained wary about recovery prospects, and were unwilling to take risks ahead of the Ramadan holidays.

Low-cost carrier Air Arabia gained 2.1 per cent to Dh0.92. Citigroup reduced its price target for the airline to Dh1.35 from Dh1.50, citing its lower revenue in the second quarter. The fall in ticket price was due to reduced fuel surcharges, weak macroeconomic bakcdrop and overcapacity by Middle East carriers.

Logistics service provier Aramex jumped by 6.1 per cent to Dh1.57 after Citigroup initiated coverage of the company with a ‘buy ’ rating and a target price of Dh1.85. Citigroup said it expected Aramex to outperform its competitors since it has the widest 
delivery network.

The other gainers in Dubai included Emirates NBD, the country’s biggest bank by assets, whose shares rose by 3.8 per cent to Dh3.60.

Analysts said trading for the remainder of the week will remain choppy as investors look up to global equities for market direction.

“There is a very high corelation between markets and so far, investors are confused about the medium and long-term outlook because of the mixed signals they are getting. While officials have been talking about global recovery, there are still negative surprises coming out, and it may be just to early to expect a turnaorund. There has to be a period of stability first before recovery takes place, and markets can sustain gains or go up,” said Hesham Bakry, institutional sales manager at Al Futtaim HC Securities.

Banks paced advancers in Abu Dhabi, with the Abu Dhabi Commercial Bank adding 4.9 per cent to Dh1.92. The National Bank of Abu Dhabi edged up by 2.7 per cent to Dh13.40. 
— rocel@khaleejtimes.com