The markets recovered strongly last month, with Abu Dhabi gaining 3 per cent and Dubai 10 per cent.
Banking
The banking system continues to benefit from further pickup in economic activity and most banks rebounded last month after August’s negative performance. Foreign ownership in banks is increasing, with some reaching limits.
Loan recoveries are picking up and growth in provisioning is declining. Most banks reported better-than-expected numbers in the second quarter.
Dubai Islamic Bank was up 15 per cent, as foreign ownership of the lender increased from 11.8 per cent to 12.8 per cent. Sharjah Islamic Bank was up 5 per cent and Union National Bank by 4 per cent. Abu Dhabi Islamic Bank dropped 5 per cent. Both National Bank of Abu Dhabi and Emirates NBD fell 2 per cent.
Non-bank financial institutions
Average value traded on the Dubai Financial Market (DFM) surged to US$268 million a day in September, up 25 per cent month on month and was almost six times the trading value achieved in September 2012. This heightened trading activity was not only unusual for summer months but is the highest monthly average achieved in at least four years.
The sentiment has improved significantly and Dubai is a candidate to host the 2020 World EXPOxpo. A decision on the host city is expected by the end of the year. Shares of DFM closed the month 14 per cent up.
Property and construction
The sector rebounded as concerns over a possible United States-led attack on Syria eased. Union Properties (up 56 per cent) and Deyaar (up 41 per cent) continued rallying on the back of new property launches and renewed interest from retail investors.
Since the second quarter, ENBD has reduced its stake in Union Properties from 31.4 per cent to 15 per cent. Union Properties announced last month that the company would be launching projects worth more than Dh1.5 billion over the next three years, while Emaar Properties and Nakheel launched new projects in Dubai, which received an overwhelming response from buyers.
A notable event during the month was Dubai Land Department’s decision to increase property transfer fees to 4 per cent from 2 per cent in an attempt to curb property speculation.
In Abu Dhabi, Aldar was up 8 per cent. In the capital, property prices in areas such as Reem Island and Al Raha Beach have shown signs of improvement on a year-to-date basis.
Telecoms
Both Etisalat and Ddu were flat during the month. Etisalat announced that the validity of a binding offer and exclusivity period granted by Vivendi for the acquisition of Vivendi's 53 per cent stake in Maroc Telecom had been extended until the end of this month.
Ports
DP World reported consolidated throughput volume of 6.6 million TEUs (standard container units) in the second quarter, which was down 5 per cent year-on-year. Except for the strong performance from the Americas and Australia, all the other operating regions suffered a decline in throughput volume in the first half, reflecting continuously challenging market conditions.
On the other hand, DP World reported better than expected quarterly profit supported by higher pricing and focus on higher profitability origin and destination volumes, which resulted in container revenue per TEU growth of plus 6 per cent year-on-year.
The management expects full-year volume to be in line with 2012. The stock was up 4.2 per cent.
Saleem Khokhar is the head of equities at NBAD Asset Management
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