UAE investors aided the US tech stock rebound in the second quarter

Microsoft tops the list of the most-traded stocks in the Emirates between April and June, Saxo Bank says

A visitor holds prayer beads while looking at financial information screens at the Dubai Financial Market (DFM) in Dubai, United Arab Emirates, on Tuesday, Nov. 10, 2015. Dubai's index declined for three straight months after a collapse in the price of crude battered economies in the oil-producing nations of the Gulf Cooperation Council. Photographer: Jasper Juinen/Bloomberg

UAE investors helped spur the rebound of American technology stocks in the second quarter of this year, with Microsoft topping the list of the most-traded equities in the Emirates between April and June, according to Saxo Bank.

Apple took the second spot in the list of the most-traded equities among the investment bank’s UAE clients, followed by Tesla, Amazon and Facebook.

“Even though we have seen a massive comeback on the stock market, we are not out of the woods yet," said Peter Garnry, head of equity strategy, Saxo Bank.

“As we enter Q3, markets remain fragile. The Volatility Index is indicating a very volatile summer, where Q2 earnings releases will finally reveal the real damage to the corporate sector and potentially give us a rough sketch of what is ahead.”

The S&P 500 recorded its best quarter since 1998 in the three-month period ending June 30, following a 20 per cent plunge in the previous three months that marked its worst quarter since the 2008 financial crisis.

The tech industry remained resilient in the face of the pandemic and record unemployment in the US, with four leading technology stocks recently surpassing a market cap of $1 trillion (Dh3.67tn) each. Alphabet was the latest to re-enter the trillion-dollar club this week and had a market value of $1.525 at 12.50pm UAE time on Tuesday. Apple is valued at $1.62tn, followed by Microsoft at $1.59tn. Meanwhile, Tesla reached $254.4bn and Facebook at $685.1bn.

Mr Garnry attributed the popularity of US tech stocks among UAE investors to a number of factors, including the easing of movement restrictions and digital innovation.

Microsoft, for instance, has focused heavily on cloud computing since Satya Nadella took over its reins in 2014. The move has paid off with the company's online solutions, especially within digital communication and workplace technology, thriving during the Covid-19 lockdown, he said.

Q2 earnings releases will finally reveal the real damage to the corporate sector and potentially give us a rough sketch of what is ahead

“With most of its production centred in China, Apple was heavily affected in the beginning of 2020. After China reopened and the initial scare in March was over, investors have started piling into the smartphone giant, catapulting it to an all-time high on June 23,” Mr Garnry added.

Tesla made a comeback in the second quarter, leaving the stock above $1,000 per share. Second quarter earnings will give a precise indication of how Tesla handled the Covid-19 pandemic, according to Saxo Bank.

The popularity of Amazon and its market gains can be attributed to the company’s continued advances in robotics and streaming, Mr Garnry said.

Meanwhile, Facebook outperformed its pre-Covid-19 highs with a 44 per cent rally in the second quarter. However, the social media platform faced strong headwinds after corporates such as Coca Cola, Unilever, Adidas and Starbucks pulled ads from the platform due to the company's failure to moderate hate speech.

“This could cause uncertainty and lead to falling share prices in the short term, but Facebook’s long-term growth is unlikely to be impacted,” said Mr Garnry.