Regional markets rallied in line with global equity markets today as the G20 summit in London sparked hopes for an economic recovery. The Abu Dhabi Securities Index led local exchanges with a gain of 2.28 per cent to 2,497.03, while the Dubai Financial Market (DFM) gained 1.21 per cent to close at 1583.19. Oil prices followed, rising $3 to break through the crucial $50 barrier and end at $51.
"Markets in the UAE are responding the strength across global equity markets and this is more of a driver than local factors," said Julian Bruce, the director of institutional equity sales at EFG-Hermes. The DFM halted trading of eight stocks today due to failure to report earnings for the fourth quarter of last year. Arab Emirates Investment Bank was the only local listing to be suspended from trading for missing the deadline to report earnings. The other seven suspended stocks were dual-listed Kuwaiti firms that were among 36 suspended in their main market for late reporting.
"The DFM listing department was keen to send many reminders to some companies in order to comply with the deadline and get full disclosure in the financial reporting," said Fahima al Bastaki, the senior vice president and market development division director at the DFM. "Our reminders were clear about the need to receive comprehensive disclosures that comply with [the Securities and Commodities Authority's] requirements."
Property-related shares on the DFM managed to shake off their woes, with the construction sector particularly strong. Arabtec gained 4.21 per cent to Dh1.73, and Drake and Scull advanced 5.88 per cent to Dh0.72. Emaar Properties rose 7.27 per cent despite a ratings downgrade by Moody's on Wednesday, and having been assigned a negative outlook. Similar gains were seen in Abu Dhabi today, with Sorouh increasing 6.19 per cent to Dh2.40, and Aldar gaining 8 per cent to Dh2.97.
"Certain sectors, such as Abu Dhabi real estate, are attracting buyers due to valuations and there seems to be some stock-selective buying elsewhere; for example, Dana Gas and particular banks," said Mr Bruce. "The first-quarter results are now eagerly awaited, but some investors are taking the view that all possible bad news is priced in and that we may see some surprises to the upside." Kuwait's exchange gained 1.28 per cent to close at 6,909.3. "(Kuwait) retail investors are shying away from the large cap stocks and smaller companies," Talal al Loghani, a portfolio manager for the GCC at Noor Financial Investment told Reuters.
"Going forward, institutions are likely to focus on the banking sector because it will benefit the most from the government bail-out package." Despite the flurry of activity, the DFM has fallen more than 70 per cent year to date, while the ADX has lost nearly 50 per cent in the same period. There has been a dearth of IPOs, with the total offering in the Middle East North Africa region down 97.6 per cent compared to the first quarter of last year, according to data from Zawya.
MENA markets raised $99.15m in three IPOs in the first quarter of this year, compared with $4.1 billion in 17 IPOs during the same period last year. * with Reuters @Email:shamdan@thenational.ae
