Gulf stockmarkets are poised to extend gains this week amid increased optimism after world markets last month had their best run in 18 years.
The Abu Dhabi Securities Exchange General Index and Dubai Financial Market General Index last month rallied 6.1 per cent and 3 per cent, respectively, outperforming Gulf markets. That came at a time US economic growth showed signs of accelerating and European policymakers moved closer to a resolution on the region's debt crisis. UAE equities were also helped by strong corporate earnings in the fourth quarter and generous dividend payments from local companies.
"We have witnessed higher trading activity as cash moves into the equity markets," said Rami Sidani, the head of Middle East and North Africa investments at Schroder Investment Management, in Dubai.
The UAE exchanges were buffeted last year by the Arab Spring and Europe's debt crisis but investors generally held on to their stocks in the expectation of generous dividends.
"Dividends will come through in March and then April will see Q1 results announcements, which will be key in determining market direction for the rest of the year. Between now and then the market should remain in an upwards trend," Shahid Hameed, Global Investment House's head of asset management for the Gulf told Reuters.
Economic data showing Dubai's economy is improving has also helped boost investor sentiment, Mr Sidani said.
"Tourism, trading, aviation and logistics, the pillars of Dubai, are thriving," he added.
Emaar Properties, which has seen increased foreign flows, is expected to report in coming days. Investors have been speculating that the region's largest developer will report strong earnings. Analysts polled by Bloomberg News expect Emaar to report a net profit of Dh474.6 million. Emaar reported a Dh273.4m net profit last year.
"Emaar has been consistently hitting highs during the day, losing some steam, and then closing just under the high - making entry points very tricky," said Marwan Shurrab, the chief trader at Dubai-based Gulfmena Investments.
Egypt's stockmarket rose 28 per cent last month, making it among the top performing bourses globally, as the country completed parliamentary elections. The Government said last month that an agreement with the IMF may come within weeks.
"Egypt's market has had a strong run," said Saleem Khokhar, the head of equities at National Bank of Abu Dhabi. "But still requires stock picking on a case-by-case basis."
Mr Khokhar is bullish on Orascom Construction Industries, the country's biggest publicly traded builder, because of its regional exposure.
The following events may move Egypt's market this week:
Egypt's Court today is expected to proceed the hearing of business tycoon Ahmed Ezz's 4.8 billion Egyptian pound alleged money-laundering case. The prosecution in November alleged public funds were invested to establish companies for Mr Ezz and his family, and some of the monies were transferred to private accounts abroad. Mr Ezz is the largest shareholder of Ezz Steel, the largest publicly traded steel manufacturer in the country.
Juhayna, the country's largest publicly traded food company, will hold an extraordinary general meeting today to decide on a reduction of the company's capital to 726.4 million pounds from 706m pounds by cancelling 20.4m pounds in treasury shares.
The Egypt court tomorrow is expected to hold a retrial of the property tycoon Hesham Talaat Moustafa, who was sentenced to 15 years in prison for paying the Egyptian security man Muhsen el-Sukkari to kill the Lebanese singer Suzanne Tamim in Dubai. Moustafa is the largest shareholder of Talaat Moustafa Group, the country's largest publicly traded property developer.
Also tomorrow, Suez Cement is expected to pay dividends to shareholders at 1 pound per share.
Elsewhere in the region, Kuwait's index was unchanged at 5,856.40 last week. Qatar's QE index jumped 2.3 per cent to 8,636.37, Oman's MSM 30 Index lost 0.5 per cent to 5,564.09 and Bahrain's index slipped 0.2 per cent to 1,136.59. The Saudi Tadawul All-Share Index moved 1.05 per cent to 6,733.68 yesterday.
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