Dubai’s benchmark index continued yesterday from where it ended on Tuesday, as stocks maintained their upward trend to set new highs since October 2009. At close, the DFM’s measure rose 1.39 per cent to 2286.61. For the quarter, it is up more than 24 per cent.
Abu Dhabi’s index also jumped 0.92 per cent to close at 3513.42.
“The momentum is definitely solid and is continuing to build up as investors see an upside in the UAE due to the reason that the markets here was lagging international and regional markets,” said Tariq Qaqish, head of asset management at Dubai-based Al Mal Capital.
The strong performance of the UAE markets, among the best in the world this past quarter, is being attributed to the flood of liquidity. The liquidity in the markets surged for the second consecutive day with the turnover in Dubai crossing a billion dirham. It stood at Dh1.09 billion with 822.27 million shares exchanging hands.
“The liquidity in the UAE banking sector is high and this is why, there is too much liquidity chasing the risky assets,” said Reda Gomma, portfolio manager at Mashreq Asset Management.
Yesterday, on DFM, heavyweight Emirates NBD advanced 3.75 per cent to Dh5.81 and on ADX, Abu Dhabi Commercial Bank climbed 6.25 per cent to Dh5.10 and First Gulf Bank rose 0.66 per cent to Dh15.35.
The banking sector has been among the main beneficiaries of this soaring trading volume. “The investors are rerating their valuations for those banks,” said Gomma. “The investors are starting to believe that the banks are bottoming out from the provisioning cycle and this is actually the case if you look at the first quarter results, you will see that there is a decline in provisioning.”
On DFM, Drake & Scull climbed to the highest level in more than a year as it was reported that the company chief executive won’t be selling his shares. The contracting company rose 1.98 per cent to Dh0.980. Among the other gainers included telecom company Du, which rose 9.71 per cent to Dh5.99 and Dubai Islamic Bank, up 0.64 per cent to Dh3.13.
In Abu Dhabi, Aldar Properties and Sorouh Real Estate, among the top traded stocks, rose 1.87 per cent to Dh1.63 and 4.52 per cent to Dh2.08 respectively. Telecom leader Etisalat remained unchanged at Dh12.00.
“In general, the recovery in the economy is solid, the expectation is around 4 per cent,” said Qaqish. “The non-oil revenue is the main driver which is expected to grow higher than 4 per cent. The macro picture is looking good.”
With the market scaling new multiyear highs these days, Qaqish, however, is not foreseeing a major correction. “The trends have definitely changed and the momentum is high. The profit taking, may be, will be on a daily basis and it will be specific stocks,” he said.