MSCI upgrade boosts inflows

Investors checking share prices on monitors at the Dubai Financial Market. The Dubai’s benchmark index closed 1.6 per cent lower at 4,693 points on Tuesday. — Kt photo

Net buying by foreigners on Abu Dhabi and Dubai bourses surged to $391 million and $139 million, respectively, in May to record a total net inflow of $530 million (Dh1.945 billion) on upbeat investor sentiment as the UAE and Qatar drove the regional rally on the back of the official upgrade by MSCI, the global index provider.

Across the key Middle East and North Africa markets net buying by foreigners jumped to $1.2 billion in May from $284 million a month before.

Qatar topped the net foreign buying trend by recording $662 million, which constituted 49 per cent of total inflows, data provided by investment analysts reveals.

Net foreign buying in Kuwait rose to $124 million, Oman ($33.3 million), Saudi Arabia ($141 million) and Egypt ($10 million).

In the last 12 months, foreigners were net buyers across all key markets accounting for a cumulative $3.9 billion fund inflow. Led by Qatar ($1.87 billion), the UAE came second and recorded $783 million in cumulative net foreign buying, representing 20 per cent of the total inflows in 12 months, followed by Kuwait ($645 million) and Egypt ($532 million), data from MubasherTrade Research shows.

Performance across Arab markets was mostly positive in May, except for Egypt and Kuwait. Egypt’s equities were showing a positive performance on the progress in the political scene. However, by end of month, the market has dropped in view of the government’s intention to impose taxes on capital gains and dividends.

Saudi equities maintained their positive momentum since the Capital Market Authority submitted a draft of rules to the Supreme Economic Council to allow foreign investors to hold shares in Saudi companies.

In Abu Dhabi, nationals, Arab and GCC citizens were net sellers with net trading values of $378 million, $10 million, and $3 million, respectively. Individuals were net sellers of $196 million, representing 70 per cent of total net trading value.

While foreigners were net buyers with net trading of $391 million nationals and Arabs represent 66 per cent of total trading on Abu Dhabi bourse in May valued at $6.4 billion. Foreigners and GCC accounted for 24 per cent and 10 per cent of total trading value, respectively.

In Dubai, nationals were net sellers in May 2014 with a net trading value of $290 million. Foreigners, Arabs and GCC nationals were net buyers with net trading of $139 million, $115 million and $36 million, respectively.

UAE nationals and Arabs represented 73 per cent with total trading of $18.4 billion in Dubai in May 2014. Foreigners and GCC accounted for 16 per cent and 11 per cent of total trading value, respectively. Institutions were net sellers of $218 million, representing 32 per cent of total trading value.

Overall in May, UAE equities sustained their positive performance despite heavy profit-taking activities by mid-May due to the official upgrade by MSCI from Frontier Markets to Emerging Markets status. The Dubai Financial Market index rose by 4.1 per cent while Abu Dhabi’s index rose by 0.6 per cent last month.

Meanwhile, the Dubai’s benchmark index on Tuesday closed 1.6 per cent lower at 4,693.20 points after diving as much as 3.6 per cent during the session. Abu Dhabi’s index also fell 1.6 per cent to 4,869.67 points.

— issacjohn@khaleejtimes.com