UAE markets hit fresh five-year highs yesterday as investors snapped up stocks that have lagged the Dubai and Abu Dhabi indexes.
The DFM Index rose 1.4 per cent to close at 3,055.95 points. Financial services-related stocks also gained as speculative investors sought stocks with cheap valuations. Dubai National Insurance and Reinsurance gained 4.5 per cent to Dh2.30.
“The speculators are back, the mood is good, there’s abundant cash in the market,” said Sebastien Henin, a portfolio manager at The National Investor, an investment firm in Abu Dhabi. “They are looking at laggards in the market, stocks that haven’t performed well, [hoping] to see them catch up with the market.”
In Abu Dhabi, the shares of cement companies led the gains on the main index.
Union Cement shares surged 14.8 per cent to close at Dh1.24 apiece. Gulf Cement jumped 13.7 per cent to Dh1.65, and Sharjah Cement and Industrial Development rose 12.7 per cent to Dh1.24.
Fadi Al Said, the head of investments at ING Investment Management in Dubai, said the rally could be a bet on infrastructure.
Investors also cherry-picked stocks expected to benefit from Dubai’s introduction of holiday-home licences.
Tariq Qaqish, the head of asset management at Al Mal Capital in Dubai, said the market had moved on the “time-sharing lease law from yesterday [Saturday]”.
“If you look at Marbella, for example, it’s full of short-term lets,” he said.
On Saturday, Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, decreed that anyone renting out holiday homes on a daily, weekly or monthly basis would be required to apply for a licence from the Department of Tourism and Commerce Marketing, the body which classifies Dubai hotels.
Shares of Emaar Properties, the region’s biggest developer, gained 3 per cent to Dh6.71, hitting a new high this year and outperforming the broader market.
Mr Henin said there was constant demand for Emaar shares.
“Institutions are piling their money into a proxy that provides access to the real estate recovery story in the UAE,” he said.
Shares of the interior contractor Depa surged 8.3 per cent to 65 US cents on the Nasdaq Dubai.
The benchmark Dubai Financial Market General Index has climbed 88.3 per cent this year, the second biggest gainer among global markets this year.
The Abu Dhabi Securities Exchange General Index, ranked third globally, has rallied more than 50 per cent in the same period.
ING’s Mr Al Said said cement firms held portfolios on their books that benefited from share market rallies, resulting in stock market-related profits.
The ADX General Index yesterday closed 1.2 per cent higher at 3,989.62 points.
There had been “continued positivity after the Expo announcement, positive international markets over the weekend, and the macro picture is looking strong”, Mr Al Said said. It was “looking good all the way till the MSCI rebalancing”, he added.
The international index compiler, MSCI, which tracks US$7.3 trillion worth of global equities, in June classified the UAE as an emerging market, an upgrade from its previous designation as a frontier market.
In the third quarter, the combined market value of the country’s bourses reached Dh72.25 billion, up from Dh13.08bn in the same period last year.
Institutional investors have been gradually increasing their holdings of local shares ahead of the UAE’s inclusion into the MSCI index next May.
Foreign investors bought $718.9 million worth of UAE shares in the first 11 months of the year, up from $202.97m in the same period last year.
halsayegh@thenational.ae
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