Buying by institutional investors helped the UAE bourses post gains for a second consecutive session, the first back-to-back increases in three weeks. However, the possibility of profit taking by retail investors today, the last trading session of the year, could buck the upwards trend. "The institutional investors are buying to beef up their books before the financial year ends," said Aymed el Saheb, the head of operations at Drahem Financial Brokerage, based in Dubai.
"Institutions may still be booking substantial losses, but a positive end to the year would help them average out some of it." Dubai Financial Market (DFM), the worst-performing GCC bourse, ended up 0.36 per cent at 1,639.34. It is down 72.36 per cent since the beginning of the year. The volume leader, Dubai Financial Market Company, rose 4.06 per cent, with more than 94 million shares traded. The bellwether Emaar Properties closed 0.42 per cent lower at Dh2.33. Shuaa Capital and Emirates NBD were among the major gains on smaller traded volumes.
"There was some selling pressure towards the end, which pulled Arabtec Holding and Emaar lower," said Wadah al Taha, a regional market analyst based in Dubai. "There is selective interest in Dubai equities, mainly in stocks like DFM Company, Emaar Properties and Arabtec." The total traded value rose to more than Dh440 million (US$119.7m), indicating fresh buying interest in the market. "It is a good sign [that] we are getting closer to the Dh500m mark. It still would be half of what had been the average trading value in the first half of the year, but it is a sign of improvement," Mr Taha said.
However, trading on the Abu Dhabi Securities Exchange (ADX) was more cautious. The ADX general index rose 1.58 per cent with 75 million shares traded at a value of just under Dh100m. "There could be some selling pressure in both Dubai and Abu Dhabi markets as retail investors and brokerage houses try and book profits at the last session of the year," Mr el Saheb said. According to analysts, prolonged geopolitical tensions could be one of the factors to trigger volatility in the market when the UAE bourses open up for the first time in 2009, on Sunday. The recent rise could not be viewed as the beginning of a positive trend, they said.
"Most of the news has now been factored in and digested by the investors, including the ongoing tensions in Gaza," said P Krishnamurthy, the chief executive of Al Rostamani Group's financial services division. "However, all eyes are on how the liquidity could return to the floor and how western equities could recover from threats of deflation and recession." Moody's Investors Service, in its latest annual credit report yesterday, said the UAE's finances were strong enough to withstand any major oil price drop. It gave the Government and the nationa's economic strength a high "Aa2" rating. Abu Dhabi, in particular, had the financial reserves to help the country overcome an oil price slump, it said.
"Even if oil prices were to fall below $30 per barrel, the Abu Dhabi Government has recourse to a large stock of offshore financial assets," said Tristan Cooper, a vice president and senior analyst at Moody's. "The core assumption that underpins Moody's 'Aa2' ratings is that the Federal Government is fully supported by the Government of Abu Dhabi, also rated 'Aa2'." The Gulf financial markets closed yesterday with mixed results. Saudi Arabia, the largest of the seven GCC markets, continued to gain for the third consecutive session, closing up 1.17 per cent, helped by gains in the shares of financial services and petrochemical firms.
"Saudi Arabia is a different story. Their petrochemical sub-index has considerable weight in the market and it has been moving well in the last few sessions," Mr al Taha said. Kuwait and Bahrain market indexes lost 0.6 and 0.27 per cent respectively while the Doha index gained 1.08 per cent. The Muscat market is closed for the Islamic new year holidays. It reopens for trading on Sunday. @Email:skhan@thenational.ae