Investors are eagerly awaiting an upturn in volumes and values on stock markets this week, when regulators are expected to deliver their verdict on Aabar Investments' move to delist and become a private entity. Second-quarter earnings are also expected to emerge in greater numbers after initial bank results from Saudi Arabia and Qatar buoyed sentiment.
"The market should remain positive this week," said Saad Chalabi, an institutional trader at AlRamz Securitiesin Abu Dhabi. "When we get to such all-time low volumes, it's usually a turning point in the market, and we saw that last Thursday as some buy activity began to take place." A panel including the Emirates Securities and Commodities Authority (SCA), the Federal Ministry of Economy and the Abu Dhabi Department of Economic Development was expected to give a public recommendation on Aabar's offer to minority shareholders. Aabar shares remained unchanged at Dh1.45 last week, the same price as the offer made to minority shareholders last month.
Aabar shares traded consistently above Dh2 for most of this year until concerns about a possible delisting began to erode confidence in the stock in May. The Abu Dhabi Securities Exchange General Index closed the week 0.2 per cent lower at 2,523.78. Standard and Poor's gave an "AA" rating on Friday to a long-term unsecured bond to be issued by Waha Aerospace. The bond will finance the purchase of six Boeing C-17 transport aircraft for the UAE Armed Forces.
Waha Aerospace, based in the Netherlands, is a special-purpose entity created by Waha Capital, an investment company based in Abu Dhabi. Waha Capital shares jumped 3.5 per cent to 58 fils for the week. The Abu Dhabi Islamic Bank index rose 0.45 per cent to 921.5 over the week. The Dubai Financial Market General Index gained 0.8 per cent to 1,519.05 last week, the highest close since June 27. Arabtec Construction moved up 6.4 per cent on Thursday after the developer Nakheel announced last week that it was close to a debt restructuring agreement with its creditors, including Arabtec. Marwan Shurrab, the vice president at Gulfmena Alternative Investments, said the news was bolstering positive sentiment.
"For the UAE markets, we should start with a much better week, as prices have mostly bottomed," Mr Chalabi said. Qatar's index added 0.3 per cent to close at 6,963.53 last week, as investors cautiously positioned their portfolios ahead of more second-quarter results, brokers said. Ahli Bank, Doha Bank, Qatar Islamic Insurance, Al Khaliji bank, Qatar General Insurance & Reinsurance, Qatar Electricity and Water, Masraf Al Rayan bank, and Ezdan Real Estate are expected to announce their second-quarter results this week.
Elsewhere in the region last week, Kuwait's measure gained 0.9 per cent to 6,505.90, Bahrain's rose 1.6 per cent to 1,392.13 and Oman's slipped 0.2 per cent to 6,217.7. Yesterday, the Saudi Tadawul All-Share Index dropped 1.1 per cent to close at 6,110.2. On Wall Street, traders face a tough time after a heavy sell-off on ugly economic data and an unexpected downturn in sentiment on quarterly earnings on the last trading day of last week.
Technology and banking results will once again shape investor mindset in the week ahead. But it will be a tough job to shift back into a positive mode after stocks dropped nearly 3 per cent on Friday. Minutes of the Federal Reserve's June meeting stoked traders' fears when officials said they were more concerned with the pace of the economic recovery. A raft of disappointing data did not help, prompting questions on whether the economy had merely hit a soft patch or was primed for a double-dip recession.
"It doesn't mean the market can't rally, but the structural problems are there and there is no doubt about it," said Joe Saluzzi, a co-manager of trading at Themis Trading in New Jersey. At Friday's close, the three major US stock indexes were each down about 1 per cent for the week: The Dow lost 1 per cent, while the S&P 500 slid 1.2 per cent and the NASDAQ shed 0.8 per cent. The coming week's earnings will include results from 12 Dow components and from the financial powerhouses Goldman Sachs and Morgan Stanley, along with the technology bellwethers Apple, Texas Instruments and Qualcomm.
For the second quarter, earnings are expected to increase 28 per cent from a year ago, according to Thomson Reuters data. The week's major economic indicators will zero in on the US housing sector, which is still struggling after the worst recession since the 1930s. In the second quarter, banks repossessed a record number of US homes as unemployment stayed high, according to RealtyTrac, a property data company.
But investors will focus on earnings this week. Close attention will be paid to revenue for signs of improvement, in light of the contrasting results from Intel and Google. "That's been the problem. They've been meeting or exceeding on cost cutting and not on demand for their products," said Terry Morris, the senior vice president and senior equity manager for National Penn Investors Trust in Pennsylvania.
"That has got to end pretty soon because the market was expecting sales to start improving, and it's not materialising." * with Reuters halsayegh@thenational.ae