Oil price rise boosts UAE shares

UAE stocks rose for a second day as rising oil prices boosted investor confidence in the economic recovery.

Shares of banks led the charge as investors judged dividend yields to be attractive.

“In addition to being relatively cheap from a valuation perspective, the UAE market offers a more resilient macroeconomic backdrop, with healthy fiscal and liquidity positions, and a sustainable growth path over the med­ium term,” said Mohamed El Jamal, the managing director of capital markets at Abu Dhabi investment company Waha Capital, which oversees more than US$300 million in mostly Middle East and North African stocks and bonds.

Mr El Jamal said dividend yields being paid out on UAE banks as well as their valuations were attractive when compared with those of emerging market stocks as a whole.

Even though loan growth is likely to slow in 2017, a rise in interest rates should bolster the margins the banks make on loans, he said.

FGB and Abu Dhabi Commercial Bank spearheaded gains in Abu Dhabi, rising by 1.6 per cent and 2 per cent respectively.

In Dubai, Emaar Properties and Dubai Islamic Bank were at the forefront of the gains, advancing 2.7 per cent and 1 per cent.

The Abu Dhabi Securities Market General Index gained 0.7 per cent and the Dubai Fin­ancial Market General Index increased 1.2 per cent.

Brent crude rose as much as 0.6 per cent, taking its gains for the month to 2.5 per cent.

While the weaker oil price since summer 2014 has reduced demand for loans and increased debt defaults, many of the biggest banks have reported gains in operating profit since then.

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